What is the fairest way to shift from a monopoly market to one that encourages competition? That's at the heart of the debate surrounding pending legislation that would alter the way California allows the creation of community-based power providers such as Sonoma Clean Power.
State law currently allows such community choice aggregation systems to be created under an opt-out basis. This means that once elected officials vote to commit a community to being part of the system, residents are automatically switched over to the new provider and then given instructions on how to "opt out." AB 2145, authored by Assemblyman Steven Bradford, a Gardena Democrat, would turn that around, meaning customers would have to take the initiative to opt into the new system.
We have had our own disagreements with a system that automatically changes consumers without their direct input. This leaves consumers at risk of being unknowingly shifted to a power supplier that charges higher rates — although that has not been the Sonoma County experience so far.
At the same time, we recognize the crippling effect such an abrupt shift back to an "opt in" basis could have, particularly on systems, such as Sonoma Clean Power, that are just getting started.
Since the creation of the power authority 18 months ago, Sonoma Clean Power has operated under the assumption that it would be able to attract consumers on an opt-out basis. Its business plan, financial projections, hiring, etc. — to say nothing of city decisions to join the power authority — all have been based on those rules.
AB 2145 has already been approved in the state Assembly. If it is approved in the Senate — it's scheduled for a hearing before the Senate Energy Utilities and Communications Committee on Monday — and signed by the governor, it would take effect on Jan. 1, potentially pulling the rug out from Sonoma Clean Power as it is just getting started.
Changing the law at this point would not only be a violation of the county's good-faith effort to follow the rules, it would be potentially costly to Sonoma County, only the second region after Marin County to have created such a system.
The legislation also offers no accommodation for systems, such as Sonoma Clean Power, that are able to offer customers rates that are below what they're paying now. Any legislative fix should recognize that such offerings take the sting out of any "opt-out" requirement.
Moreover, this change would hardly create the even playing field that the bill's supporters — which include most major investor-owned utilities — contend. Requiring new customers to "opt in" merely assures the majority of consumers will remain with their current providers, giving them the advantage. Supporters of community choice aggregation systems contend that without the assurances of such a customer base, new systems won't be able to get the loans and other financial assurances they need to get started.
We don't know the right solution, but it's clear, particularly concerning Sonoma Clean Power, AB 2145 isn't it.