California Utilities Want Wealthy Defectors to Pay Up for Power

(Bloomberg) -- PG&E Corp. has been losing customers in tony Marin County north of San Francisco since 2010 to a new kind of rival, and says their growing popularity is costing the utility's remaining customers, to the tune of $180 million last year. That could balloon to $500 million in the early 2020s, according to a statement Tuesday.

California's big three utilities are looking for ways to address this emerging issue. They helped make the state a clean-energy leader by striking some of the first big deals to buy wind and solar power. Problem is, those early contracts came with higher prices that were typically locked in for decades, and it's costing them customers.

The utilities are facing smaller local suppliers that are signing their own power-purchase deals at current, lower rates, and then siphoning off customers by passing on the discounts. At least 4.5 million California homes and businesses will be getting electricity from them by yearend, according to the California Community Choice Association, which represents these new power companies.

Utilities already get monthly exit fees from customers who switch. However, PG&E, along with Edison International's Southern California Edison and Sempra Energy's San Diego Gas & Electric say the model for calculating the fee is “unbalanced,” according to the statement. They submitted a 363-page proposal to regulators that they say is aimed at “allocating costs fairly between customers.”

Community choice aggregators dispute that idea and are submitting their own proposal to the California Public Utilities Commission. There's a procedural hearing set for next month. No doubt we'll be hearing more about this.

To contact the reporter on this story: Christopher Martin in New York at cmartin11@bloomberg.net.

To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Will Wade, Margot Habiby

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