California Considers Increasing Direct Access Cap

By August 17, 2011 News

The state of California is again considering increasing the number of customers that can purchase electricity from competitive suppliers following an increase passed by the legislature in 2009 that was implemented over the last few years. Since California restructured their retail electricity market in 2001-2002 to restrict competition, only a small number of commercial and industrial customers have retained the ability to purchase electricity from competitive suppliers by participating in the Direct Access program. In 2009, the California legislature approved a measure to increase the size of the Direct Access program from 1,900 MW to 2,700 MW, representing roughly 12% of the total overall electricity market in California. There was great interest on the part of customers and as a result, the additional space in the program has quickly filled up leaving a long list of customers waiting for access.

Earlier this summer, legislation was introduced in the California senate to increase the Direct Access cap once again. Senate Bill 855 would add another 1,000 to 1,300 MW to the current Direct Access cap which is fully subscribed. Based on the response to the first increase and the large number of customers on the waiting list, it is reasonable to expect that this additional space, if passed, would generate substantial interest from customers and likely fill up quickly. The first hearing on the bill was scheduled for early July, but that hearing was delayed. There is also work underway on restructuring exit fees for customers who elect to leave the regulated utility and participate in Direct Access.