Most opt out of choosing new power companies.
Thursday, February 4, 1999
In March of last year, California''s public electricity industry was deregulated by Assembly Bill 1890. At the time, the buzz on deregulation was that the move would open the market to competition from other energy service providers (ESPs)--many of which would provide energy from environmentally friendly alternatives to old standbys like nuclear and petroleum-based sources.
But local officials involved in the front lines of deregulation efforts say the real potential of the movement has yet to be reached.
"The only people making money or saving substantially are consultants, investor-owned utilities, of course, and big manufacturers. Cities have big uses and little uses so it''s hit-or-miss." says Wayne Green, assistant to the city manager in Salinas.
When deregulation went into effect last spring, some companies and cities began to explore the idea of aggregation--or banding together to buy energy in bulk--with the idea of obtaining bargaining power for better rates against the three major utility companies (UDCs) PG&E, SoCal Edison and San Diego Gas & Electric. Locally, the cities of Salinas, Monterey and Gonzales considered that option.
"We''ve been in the [San Francisco Bay Area-based ABAG (Association of Bay Area Government)] aggregation pool for about eight months now," says Green. "We were expecting, or hoping for, about a 4 percent decrease in our energy costs, but we got the report and we haven''t seen a decrease, it''s been about level."
According to its Website, ABAG has more than 60 local governments, ranging from the north Bay Area to southern Monterey County, participating in aggregation. The combined group has $50 million in annual electricity costs and expects to have saved around $3 million in 1998.
Salinas'' annual electric bill with PG&E--which provided the city''s electricity before deregulation--was about $1.6 million, according to Green. He feels one reason there hasn''t been a big decrease in cost yet is the impact of the "competitive transition charge" (CTC), which was added to all electric bills since the change in March ''98.
"It limits savings for sure. Until there is total deregulation [when the CTC is eliminated in 2002], we won''t see any savings. The power of PG&E still plays in the market," says Green.
A consolidation of almost 300 accounts that the county of Monterey is responsible for has also received electricity from the ABAG aggregation pool since April last year. Steve Larson, facilities manager for Monterey County, says that he has no concrete way of calculating the impact yet. "We haven''t really reported to the board [of supervisors] yet. We wanted to make sure it has an appropriate length of time to work out the kinks. It''s much more complicated, there''s more administrative headaches, but we''re keeping an eye on it."
Although Larson admits the new affiliation with ABAG has made some things easier by helping Monterey County computerize their system, he hasn''t been able to make a numeric evaluation yet, to see if the switch away from PG&E has saved the county money.
"It just depends on what''s happening at the moment and how much [electricity] you demand and use," he says. "An aggregator [like ABAG] can guarantee [using] a large amount of power so they can wheel and deal for the best price and we thought that was promising, so we joined. So far, it''s been neutral, no increase or decrease."
Officials in the city of Monterey, however, have apparently not been pleased with their choice of joining the ABAG group in December 1997. "We''re in the process of withdrawing," says Tom Reeves, Monterey city engineer. "We decided to go back [to PG&E] because they [ABAG] weren''t saving us any money and there were some billing problems." He adds that Monterey''s electric bill actually rose 0.2 percent since joining.
On the household level, since last March, Californians have been bombarded with ads enticing them to switch to new energy companies, such as Green Mountain and Enron, which get their electricity primarily from hydro, solar and wind power.
But how many customers, made relatively comfortable by decades of PG&E power, have actually made the change to a smaller ESP? According to reports submitted monthly by the three major utility companies to the director of the Energy Division of the California Public Utilities Commission (CPUC), about 5,450 people statewide switched from a UDC to an ESP in December. Of that total, 3,365 were PG&E customers. Steve Roscow, who works in the CPUC Energy Division, says they cannot release data on which ESPs people have switched to.
Perhaps a more important issue than the quantity of customers is the value of their decision. Many consumer groups, such as The Utility Reform Network (TURN) and Ralph Nader''s Public Citizen, have been opposed to deregulation since the beginning, because of one of the purposes behind it--the bailout of debts incurred by utility companies building expensive and polluting nuclear power plants. AB1890 allowed UDCs to include the onerous competitive transition charge in monthly bills.
Supporters of the bill as well as the large utility companies frequently boast about the 10 percent rate cut given to customers in the new "restructured industry." However, this rate reduction is paid for by low-cost bonds, which may end up costing more than the 10 percent savings in the long run due to interest accrued.
Proposition 9, on the California ballot last November, sought to get rid of the CTC imposed by PG&E and others, and to require a 20 percent rate reduction instead of 10 percent. But the proposition failed miserably--voted down by 73 percent of Californians.
However encouraging the concept of energy deregulation is, to create fairer competition and more opportunity for "green" energy sources, the reality of its success is still in the development stage.
"It will be some guesstimation at first at how well this is working and how it compares," says Larson. "We analyze it on a day-to-day basis."