Regulatory Risks Tied to DA in California

Here's a cut at the taxonomy of regulatory risks associated with Direct Access. Please let us know if the list looks about right.

FYI: Sue and I are scheduled to travel to Portland to sit down with Steve Swain & Co. in the attempt to ensure that the folks managing the book are well briefed on the regulatory risks.

Finally, note that though the risks listed below are linked to PUC actions, the California Legislature could take actions that could trigger the same risks. For example, the Legislature could pass a bill directing the PUC how to allocate costs associated with the utilties' undercollection, the bonds issued to recover general fund money used to purchase power, DWR's long term contracts, etc.

Best,
Jeff

1. Retroactive Suspension of DA Contracts: The PUC rules in a subsequent decision that DA is suspended on some date between July 1 and September 20th.

2. Contract renewal forbidden: The PUC includes contract renewal under the suspension of DA.

3. No incremental "DASR'ing": The PUC includes incremental additions and subtractions of DA customer's load under the suspension of DA (e.g., fast food chains, University campus)

4. Cost allocation: The PUC adds new costs to DA accounts and/or disproportionately shifts existing costs to DA accounts. Costs with the greatest risk of being shifted to DA customers include: IOU undercollection, bonds to repay the state general fund, and DWR contracts. The costs associated with these categories are substantial.

Additional suggestions from Mike Day:

5. DASR processing : If the utilities attempt to implement the Commission-ordered suspension in an onerous way, it may put at risk contracts executed prior to 09.20.01 but not yet DASR'd.

6. Confidentiality of contract information: The utilities and/or the PUC may require ESPs to show contracts as proof that contracts were executed prior to 09.20.01.