California “Direct Access” Phase IV Registration Opens January, 2011
California’s restricted electricity market is opening for the last time in January…for now.
Since California’s initial efforts to deregulate were suspended following the market manipulations that caused the California energy crisis in 2000/2001, the California PUC developed and implemented a controlled system for allowing commercial and industrial clients to leave investor-owned utility service and buy power from the competitive markets through “Direct Access Service.” Starting in 2010, a finite amount of load (8,354 annual GWh) has been opened to commercial and industrial clients through four enrollment windows in 2010 (35%), 2011 (35%), 2012 (20%), 2013 (10%). With the 2012 enrollment period fully subscribed, registrations for Phase IV (2013 enrollment) will take place on January 13, 2011. The registration is a first-come, first-serve digital system that typically fills the enrollment allocation within a matter of seconds.
In response to the strong demand for Direct Access service, State Senator Christine Kehoe submitted Senate Bill 855 to the California legislature. SB 855 would seek to increase access to the competitive electricity markets. This bill will be addressed in 2012, but offers the prospect that additional end-users will be able to take advantage of the pricing and flexibility offered by independent electricity providers.
Before enrolling in Direct Access, commercial and end-users should evaluate all cost-components to evaluate the financial impacts of leaving utility supply. While the competitive markets can offer better rates, California’s utilities are authorized to charge a fee to those customers that leave utility service to compensate for stranded investments. This is referred to as the “Power Charge Indifference Adjustment” or PCIA. After a recent legal challenge, the investor-owned utilities will soon be releasing new PCIA charges for 2012.