Update on California Senate Bill Concerning Direct Access

Ben Faulkinberry

In March 2015, California Senate Bill 286 was introduced by Senator Robert Hertzberg, and was promptly referred to the Senate Committee on Energy, Utilities and Communications.

The original language of the bill called for a complete removal of the existing cap on Direct Access by July 1, 2016, which would have allowed all non-residential electricity customers under PG&E, Southern California Edison, and San Diego Gas & Electric to elect to receive 3rd party electricity supply. Suppliers’ generation mix would have been held to the same renewable portfolio standard as the utilities, requiring 33 percent of electricity to come from renewable resources by 2020.

The bill has been amended in a few notable ways since March. First, the bill would no longer entirely remove the cap on Direct Access, but would instead only raise the existing total cap by another 8,000 gigawatt hours, representing an approximate 33 percent increase.

Additionally, new 3rd party generation would be subject to a higher renewable portfolio standard, requiring a minimum of 51 percent of energy to come from renewable sources. It is expected that customers already on Direct Access would be grandfathered in at the current Renewable Portfolio Standard (“RPS”) of 33 percent.

A higher renewable portfolio standard plays favorably to large tech companies and other institutions which have already made investments in renewable generation facilities and wish to sell excess energy in the marketplace. Traditional suppliers may end up in a less competitive position with the 51 percent RPS requirement, as renewable energy typically increases their wholesale costs.

Lastly, the timeline of the bill has changed. In the new language, changes would go into effect Jan 1, 2016, and the cap would be raised over a period of three years.

The bill has evolved substantially through these amendments, and may see additional amendments in the future. C&I customers, suppliers, utilities, and consumer advocacy groups will be watching closely as SB 286 progresses. Keep track of SB 286’s status and activity by visiting the California Senate’s website.

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The information in this page is offered only for general informational and educational purposes. It is not offered as and does not constitute legal advice.

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