Energy Policy

Legislation Could Expand Energy Choice for California Customers

4 min read

California is considering new legislation that could give business owners more flexibility to choose their energy provider, but customers should take action in June if they want to take advantage of it.

Since 2009, the Golden State has offered a direct access program that allows some commercial energy customers to buy their electricity from an energy service provider (ESP) other than the state’s three biggest utility companies. However, current law caps participation.

Senate Bill 286 would expand that cap, allowing more businesses to take advantage of the program that already benefits many schools, universities, hospitals, government agencies, retail and manufacturing businesses.

“The concept is simple and proven: Give energy users more choices and they’ll have more control over costs,” Sen. Bob Hertzberg, the bill’s author, said in a statement published in a recent article by Environment and Energy Publishing.

If the cap is expanded, customer participation is likely to be phased in over two or three years. Currently, the existing cap is managed through a waiting list.  The waiting list is created every year when customers who are interested in direct access submit their requests for service, and via a random process, are assigned a position on the waiting list.

Should room open up under the existing cap, the space is filled with new load, with customers already on the waiting list for direct access receiving first priority. It is not clear yet whether or how the waiting list will be used, if SB 286 is passed, but we recommend all companies interested in direct access be on the waiting list.

Here are four common questions California business owners may have if they’re considering taking advantage of direct access.

What Are The Advantages of Using Another Energy Provider?

Greater energy choice brings potential advantages for customers, including competitive prices, better customer service, and customized products and services that allow customers to have more control over their energy usage and costs.

Constellation can offer you flexibility when it comes to purchasing energy and taking advantage of renewable energy. All energy service providers, including those who provide direct access, must meet California’s mandate to generate 33 percent of their total energy from renewable sources by 2020. Indeed, as currently written, ESPs serving new direct access load permitted by SB 286 would have to meet a renewable standard that exceeds the currently mandated levels.

Some customers have environmental and sustainability goals that go beyond the mandated levels; Constellation can help those customers in siting and building new on-site renewable facilities. For other companies, however, the cost of building renewable energy projects can be a deterrent. Constellation can work with these customers to fund a renewable energy project  with the money they save over time. This eliminates upfront capital expenses and makes it easier for these companies to achieve savings and meet their own renewable goals. If an on-site project isn’t possible, there are other options, including purchasing renewable energy certificates from other solar or wind generating facilities.

How Does the 2015 Direct Access Lottery Work?

The direct access program is currently capped in each utility service territory, so customers must enter into an annual lottery to become eligible. As a result of the lottery, a waiting list is created so when new space becomes available during the following year, it will be allocated to customers based on where they rank on that list.

Customers must reapply for a place on the list each year.

The lottery process for California’s three investor-owned utilities will take place from June 8-12 this year. During this time period, each utility will accept six-month switching notices that tell the utility what accounts they want to put into direct access should there be room under the cap. After this submission period, all eligible notices will be randomly assigned to the 2016 waiting list. On the last business day of each month in 2016, each utility will determine if there is room for additional customers to participate in the program and offer that option to the first customer listed on the waiting list.

If direct access is expanded, customers on the 2016 waiting list may have priority access to the newly allotted space. That’s why it may be more important than ever to sign up this year.

What If I Sign Up and Decide Not to Switch? 

Currently, signing up for the lottery and being placed on the waiting list do not obligate you to switch providers. If you receive a notice that you are able to take advantage of direct access but decide remaining with your current utility is the best option at that time, you can decline to participate. The utility will then notify the next customer on the list.

How Do I Sign Up for Direct Access in the Lottery Process?

As a proponent of energy choice, Constellation will submit the paperwork required to enter the direct access lottery on behalf of our current and future customers. If your company is chosen for direct access, you may choose Constellation or another energy service provider for your electric needs.

Constellation offers a comprehensive portfolio of energy management solutions for businesses in California. We offer numerous pricing strategies, including the ability to fix the price you pay for electricity to give you greater budget certainty and the ability to purchase at both fixed and index rates.

Additionally, we strive to provide you with the most up to date market and policy information so you can make educated decisions about when and how to buy your electricity. If you’re a current customer interested in entering the direct access lottery, we encourage you to contact your account manager or attend our 2015 California Regulatory Update Webinar on Thursday, May 21st at 10:00am PDT.

Register for the webinar here.

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