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SB-1287 Electric service providers and community choice aggregators: financial security requirements.(2021-2022)

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Date Published: 02/18/2022 09:00 PM
SB1287:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 1287

Introduced by Senator Bradford

February 18, 2022

An act to amend Section 394.25 of the Public Utilities Code, relating to energy.


LEGISLATIVE COUNSEL'S DIGEST


SB 1287, as introduced, Bradford. Electric service providers and community choice aggregators: financial security requirements.
Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations. Existing law obligates an electric service provider or a community choice aggregator to pay any reentry fee imposed on a customer that is involuntarily returned to service provided by an electrical corporation designated as the provider of last resort, except as specified. Existing law requires an electric service provider or a community choice aggregator to meet a financial security requirement as a condition of registration by posting a bond or demonstrating insurance in an amount deemed sufficient by the commission to cover the costs of those reentry fees. Existing law, commission Decision 18-05-022, creates a formula for calculating the financial security requirement, which adds a per-customer administrative cost for returning customers to service by the electrical corporation to the costs for 6 months of incremental procurement, multiplied by the number of returning customers. Existing law obligates customers to pay the reentry fees if the electric service provider or community choice aggregator becomes insolvent, as provided.
This bill would require the posted bond amount, or demonstrated insurance amount, at the time of registration by an electric service provider or a community choice aggregator to be no less than $500,000. The bill would also require the commission to update the financial security requirements for electric service providers and community choice aggregators to instead include costs for no less than 12 months of incremental procurement incurred by the provider of last resort, upon the customers’ involuntary return.
By requiring the commission to increase the financial security amount required to be paid by community choice aggregators to cover the cost of customer reentry fees upon the customer’s involuntary return to service provided by an electrical corporation, the bill would impose a state-mandated local program.
Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because the provisions of this bill would be a part of the act and because a violation of an order or decision of the commission implementing its requirements would be a crime, the bill would impose a state-mandated local program by creating a new crime.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for specified reasons.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 394.25 of the Public Utilities Code is amended to read:

394.25.
 (a) The commission may enforce the provisions of Sections 2102, 2103, 2104, 2105, 2107, 2108, and 2114 against electric service providers as if those electric service providers were public utilities as defined in these code sections. Notwithstanding the above, nothing in this section grants the commission jurisdiction to regulate electric service providers other than as specifically set forth in this part. Electric service providers shall continue to be subject to the provisions of Sections 2111 and 2112. Upon a finding by the commission’s executive director that there is evidence to support a finding that the electric service provider has committed an act constituting grounds for suspension or revocation of registration as set forth in subdivision (b) of Section 394.25, the commission shall notify the electric service provider in writing and notice an expedited hearing on the suspension or revocation of the electric service provider’s registration to be held within 30 days of the notification to the electric service provider of the executive director’s finding of evidence to support suspension or revocation of registration. The commission shall, within 45 days after holding the hearing, issue a decision on the suspension or revocation of registration, which shall be based on findings of fact and conclusions of law based on the evidence presented at the hearing. The decision shall include the findings of fact and the conclusions of law relied upon.
(b) An electric service provider may have its registration suspended or revoked, immediately or prospectively, in whole or in part, for any of the following acts:
(1) Making material misrepresentations in the course of soliciting customers, entering into service agreements with those customers, or administering those service agreements.
(2) Dishonesty, fraud, or deceit with the intent to substantially benefit the electric service provider or its employees, agents, or representatives, or to disadvantage retail electricity customers.
(3) Where the commission finds that there is evidence that the electric service provider is not financially or operationally capable of providing the offered electric service.
(4) The misrepresentation of a material fact by an applicant in obtaining a registration pursuant to Section 394.
(c) Pursuant to its authority to revoke or suspend registration, the commission may suspend a registration for a specified period or revoke the registration, or in lieu of suspension or revocation, impose a moratorium on adding or soliciting additional customers. Any suspension or revocation of a registration shall require the electric service provider to cease serving customers within the boundaries of electrical corporations, and the affected customers shall be served by the electrical corporation until the time when they may select service from another service provider. Customers shall not be liable for the payment of any early termination fees or other penalties to any electric service provider under the service agreement if the serving electric service provider’s registration is suspended or revoked.
(d) The commission shall require any electric service provider whose registration is revoked pursuant to paragraph (4) of subdivision (b) to refund all of the customer credit funds that the electric service provider received from the Energy Commission pursuant to subdivision (a) of Section 25744 of the Public Resources Code. The repayment of these funds shall be in addition to all other penalties and fines appropriately assessed against the electric service provider for committing those acts under other provisions of law. All customer credit funds refunded under this subdivision shall be deposited in the Renewable Resource Trust Fund for redistribution by the Energy Commission pursuant to Chapter 8.6 (commencing with Section 25740) of Division 15 of the Public Resources Code. This subdivision may not be construed to apply retroactively.
(e) (1) If a customer of an electric service provider or a community choice aggregator is involuntarily returned to service provided by an electrical corporation, any reentry fee imposed on that customer that the commission deems is necessary to avoid imposing costs on other customers of the electrical corporation shall be the obligation of the electric service provider or a community choice aggregator, except in the case of a customer returned due to default in payment or other contractual obligations or because the customer’s contract has expired. As a condition of its registration, an electric service provider or a community choice aggregator shall post a bond or demonstrate insurance insurance, in an amount of no less than five hundred thousand dollars ($500,000), sufficient to cover those reentry fees. In the event that an electric service provider becomes insolvent and is unable to discharge its obligation to pay reentry fees, the fees shall be allocated to the returning customers.
(2) To protect the customers of an electric service provider or community choice aggregator from fees allocated to returning customers subject to paragraph (1) upon involuntary return to service provided by an electrical corporation, the commission shall update the financial security requirements established pursuant to paragraph (1) to include costs for no less than 12 months of incremental procurement incurred by the provider of last resort in the calculation of the financial security requirement amount.

SEC. 2.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act or because costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.