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California Focus: CCAs bring the spark of comeuppance to big utilities

You can call it a form of comeuppance for huge privately-owned California utility companies unscathed so far by exposure of their negligence and blundering of the past decade. They now find themselves deeply threatened by what some might consider a small army of mosquitos.

No individual was penalized when a federal trial found Pacific Gas & Electric Co. guilty of criminal negligence in the 2010 San Bruno pipeline explosion that killed eight persons and destroyed dozens of homes. The company itself was fined just $3 million, a pittance for the vast enterprise.

Similarly, no company executive has yet been charged with anything criminal in the well-documented multi-billion dollar collusion between Southern California Edison Co. officials and Michael Peevey, former president of both Edison and the state Public Utilities Commission. They agreed privately to force consumers to pay the bulk of the costs for decommissioning the San Onofre Nuclear Generating Station in northern San Diego County, rendering subsequent public hearings completely without meaning. That case is still under investigation, more than two years after raids on Peevey’s homes uncovered key documents in the case.

But the PUC, a participant in the illicit meeting where the decision was made to dun consumers more than $3 billion for the closure, saw its members carefully maintain straight faces while fining Edison a puny $16 million for not reporting a meeting their own chief attended.

Those paltry penalties deprived millions Californians of justice. But a different kind of punishment is now pecking away at the utility giants. This comes in the form of Community Choice Aggregations, arrangements where cities and counties can let electricity customers choose whether to stay with the existing utilities or switch to a locally-run public entity that buys power from generating companies at the source and brings it to consumers via utility company lines. Nonprofit CCA prices are generally lower than those of for-profit utilities.

How seriously do the utilities take the threat of CCAs? One indicator was the 2010 campaign for Proposition 16, run by and for PG&E, which spent $46 million qualifying and promoting the measure. That initiative would have allowed CCAs to form only after a two-thirds supermajority vote in any area involved. Essentially, that was an effort to kill the CCA idea. Even without much experience with CCAs, and with opponents spending less than .2 percent as much as PG&E, the measure lost by a 53 to 47 percent margin.

The eight current California CCAs now operate in places as diverse as Sonoma County – with its Sonoma Clean Power – San Francisco, Marin and the high desert city of Lancaster in Los Angeles County. Butte County is exploring the idea. So is San Diego. Just this week San Jose became the largest city in the country to approve its own community choice program.

But the most serious comeuppance so far for the utilities came this spring, when Los Angeles County supervisors – free to do this because Proposition 16 failed – voted to create a CCA that will buy power primarily from renewable sources like solar thermal arrays, wind farms, hydroelectric dams and geothermal wells.

When the new CCA opens next year, anyone in unincorporated areas within California’s most populous county can switch to it. Scores of cities in the county will also be able to join the CCA and provide residents the choice of whether to stay with Edison or opt out.

The city of Los Angeles, which has run a publicly-owned utility of its own for many decades, will not be eligible.

No one has reported the exact amount CCAs already cost the big utilities, but it is sure to be in the billions of dollars once the Los Angeles County version comes online.

The companies know the most effective way for them to retain customers under this burgeoning free-choice system is to provide better service. So Edison is building scores of new electric vehicle charging stations, which look progressive even though they serve only a tiny fraction of Californians. And PG&E has upgraded equipment in San Francisco, cutting the frequency of significant blackouts to an average of just 1.02 times per customer per year.

CCAs, of course, are not a direct punishment of PG&E and Edison for their blunders and illegal acts. But CCAs very likely would not be proliferating without that very recent history, which saw the big utilities create an unfriendly climate for themselves.

Email Thomas Elias at tdelias@aol.com.