California Office Campus Wins the Electric Lottery

California Office Campus Wins the Electric Lottery

Request

A three-building office campus in southern California reaches out to Alternative Utility Services, Inc. (AUS) for assistance in joining the direct access program.

Electric deregulation (retail choice) is active in 13 states including the District of Columbia. California initially started down the path of full access (complete electric deregulation) for all customer rate classes, but after periods of energy choice in the late 1990s and early 2000s, the model is now strictly limited. A combination of 1) electric generator’s manipulation of the wholesale market and 2) the method that regulators used to set up the deregulated market eventually forced a financial collapse of the utilities.

The California legislature suspended electric choice, or direct access, in 2001 after the state suffered an energy crisis. Customers that did get on to 3rd party supplier contracts were allowed to not only complete their energy supply contracts, but remain on direct access as long as they continued to remain on 3rd party supply. Direct access under the current rules created and enforced by the California Public Utilities Commission (CA PUC) and the California Division of Ratepayer Advocates remains limited, whereby very few customers have the opportunity to use a third party supplier.

Solution

Enrollment into this program is allowed by the CA PUC exclusively through a lottery system.  Customers enter the lottery via a ‘wait list’ in early June for alternative supply to begin the following January. Customers on the wait list are allowed to enter the direct access program by ‘winning the lottery’ through either 1) the PUC releasing additional capacity, or 2) other customers dropping off the program.

AUS helped the office campus apply for direct access in June 2014 for alternative supply options starting in 2015.  They were placed on a wait list and were accepted (won) because of recently opened capacity in Mid-February.

AUS negotiated for a competitively-priced alternative supply contract that will save the office campus 26.6% or $102,916 dollars this year based on typical historical consumption of 2,250,000 kWh.

Added Benefit

As long as the office campus remains with a 3rd party supplier on direct access, they will have continued savings against the local utility. With only a small fraction of commercial customers able to capitalize on direct access, many retail choice advocates are petitioning the California Public Utilities Commission to either lift the cap to allow more businesses to participate, or simply open up the market to everyone.  Pending any changes, getting on to Direct Access is like winning the lottery.