Customer choice: Crucial to the health of the electricity market

We casually accept that it is our right to choose our wireless, natural gas and internet service providers — even our grocery store. Yet the state continues to deny the right of choice to the majority of electricity consumers.

The ability to choose electric service providers should be little different from these other services. Electricity choice is particularly important as some of these choices could be critical not just to individuals, institutions or business, but to the state. Did you know there are some electric service providers that provide nothing but renewable energy?

Renewable energy is a critical issue to many Californians yet they have no ability to access it. Instead they must rely on their assigned utility to buy it for them and at most, will only receive less than a quarter of their electricity from renewable sources.
People get caught up in the energy crisis. No argument that there were problems, but not with retail energy, a customer's right to choose had been operating for several years – successfully – before the crisis hit the wholesale market. And it continues today. In fact, Commerce Energy just celebrated the ten year anniversary with their first residential customer in California, who is still happily enjoying the benefits of choice.

Choice was suspended in the electricity market, however, when there was a supply crisis in 2001. Then Governor Davis proclaimed that a "state of emergency" existed within California as the result of unanticipated shortages in electricity and the resulting increases in wholesale electricity prices.

The proclamation and subsequent legislation directed the state to procure power on behalf of the utilities, one of which was bankrupt with another threatening. The Public Utilities Commission was also directed to suspend the right of consumers to exercise customer choice while the state procured the necessary power.

There are some of us still able to exercise choice because we were already doing so before choice was suspended. As a group, those currently exercising customer choice comprise an impressive cross-section of California and the state's economy. We include governments, schools and universities, hospitals, manufacturers, agricultural customers, retail malls and stores, restaurants and fast-food chains, hotels, amusement parks as well as residential customers and small businesses.

Today the crisis is well behind us, and the reasons why customer choice was suspended have either been served, addressed through legislation or regulation, or no longer pertain. This is largely due to positive actions taken by the Commission and the Legislature. The continued suspension of customer choice as a permanent regulatory condition is unnecessary and counter-productive for California consumers.

Moreover, suspended customer choice means Californians who want to buy renewable power have no avenue to do so. This is a shame because we have a historic opportunity to empower Californians to reduce their climate change emissions through personal and economic choices within their reach, such as the choice to purchase renewable power.

The Public Utilities Commission is currently working on a proceeding that will lead to the lifting of the suspension of customer choice. The Commission should continue and finish this important work and choice should be restored.

The notion that the constitutionally chartered Public Utilities Commission is not the right place to review and address the delivery of electricity is absurd. There are hundreds of talented and knowledgeable experts at the PUC whose mission is to regulate the delivery of electricity. The original restructuring plan originated at the PUC. The market design problems that ultimately caused the meltdown almost a decade ago stemmed from the involvement of the Legislature in a process that attempted to include a little something for everyone, but led to unforeseen, unintended consequences.

Critics contend that customer choice was a "key component" of restructuring, but never demonstrate how customer choice had anything to do with the crisis, because they can't. Instead, opponents of customer choice use hyperbole to manipulate people's perspective on choice at a time when personal empowerment can yield societal benefits through the wider availability of renewable power, as well as competitive disciplining of utility prices.

The people of California realized this when they turned back Proposition 80 in 2005, which would have forever taken away the opportunity for customer choice of electricity providers. Yet the naysayers persist.

It is time for the state agency with the experience and expertise, the PUC, to build on the market changes they and the Legislature have been working on since 2001, take the successes of other states in the intervening years in to account, and restore Californian's right to choose.