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Up against the Balrog

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Because this is a column, and I can't draw, and what I'm about to write is in grave danger of getting technical and there will be acronyms, I'm going to give you a visual analogy that will help you make it through the following. (And you're going to want to make that effort because, if you are reading this, you very likely reside somewhere in San Luis Obispo County, which makes it almost as likely that you are a customer of the community choice energy program that is now providing electrical power to a large number of our residents, and this is about an existential threat to that program.) I'm also going to assume that we share some pop culture references in common.

Did you read or see The Fellowship of the Ring? Remember when Gandalf met the Balrog, "a demon of the ancient world"? Remember how, after Gandalf finally triumphed and his flaming foe tumbled into the abyss, a tendril of the Balrog's whip came floating up, wrapped around his ankle, and yanked him over the cliff?

OK: Gandalf equals community choice energy; the Balrog equals the California Public Utilities Commission (CPUC) (and/or California's investor-owned utilities, the two often indistinguishable from each other); and that whip equals a power charge indifference adjustment, or PCIA.

Trust me. It's a perfect analogy.

The theory behind the PCIA—more simply, an exit fee—is that customers leaving utilities like PG&E in favor of community choice programs must still pay their fair share of the cost of the power that the utility contracted to purchase on their behalf, with a 10-year limit on such costs. That changed in October 2018, when the CPUC changed the rules, allowing utilities to stick departing customers for above-market costs of energy generation for the lifetime of the generating assets.

Every community choice program has now been forced to assume the burden of the utilities' stranded assets and contracts, seeing their competitive advantage of lower cost energy and operating costs squeezed and their revenues slashed—revenues that would have gone to community investment, electrification, and economic development—by the rising PCIA.

That 2018 game-changer is only now getting its day in court. In a June 30 friend of the court brief submitted in support of an appeal of the CPUC's decision, the California Alliance for Community Energy (CACE) gets right to the point:

"The PUC ... is weaponizing the PCIA: enabling the investor-owned utilities to achieve by regulatory means a weakening of community choice that they have been unable to achieve in the legislative arena." (For a small taste of the history of those extracurricular escapades, check out New Times' reporting on Proposition 16 from 2009.)

"When the PCIA is used as a weapon against community choice energy programs, it undermines California's strongest leaders and champions for achieving the state's clean energy goals, for creating the 21st century energy system, and for addressing the climate crisis."

The amicus brief concludes, "The CPUC, rather than accelerating the energy system of the future, is working to maintain the status quo, the outmoded, dangerous, and faltering monopoly utility system."

The Alliance for Nuclear Responsibility and Mothers for Peace have also filed a friend of the court brief, bringing it all back home and putting a name on those stranded assets:

"The power charge indifference adjustment has enabled an uneconomic, aging nuclear power plant to operate well past its prudent useful life ... . Non-customers now absorb the majority of above-market costs for all of PG&E's utility-owned generation and receive nothing in return for such payments. This external source of financial life-support for Diablo Canyon nuclear power plant—more than $2.8 billion over the past three years—has relieved pressure on PG&E to reduce electricity generation costs."

Or as CACE puts it: "It would be expected that utilities would shed or retire above-market energy contracts over time, and refrain from procuring high priced energy on behalf of customers they know to be departing. In practice, however, this has not been the case. PCIA charges have increased rather than decreased over time."

Or as anyone else would put it: Hey, somebody else is paying for it. Party on!

In short, this is a massive threat to the financial viability of community choice as a competitive option for public power, and as such, a threat to the ability of California to meet the challenge of the climate crisis.

Because this is not a movie and no sequel is guaranteed, Gandalf needs to cut that whip and disengage himself from the ancient dead weight threatening to pull him into the abyss. And he could use a hand to haul himself up from the edge of that cliff.

In the real world, this is an election year. Feel free to ask any candidates asking you to send them to, or keep them in, Sacramento what they intend to do about the CPUC's out of control exit fee for community choice customers, and when they intend to introduce legislation to bring that fee, and the utilities' alleged regulator, under control. Δ

Andrew Christie is the director of the Santa Lucia Chapter of the Sierra Club. Send comments throughclanham@newtimesslo.com.

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