Comments of Southern California Edison Company

(U 338-E) on the Draft Gap Analysis / Choice Action

Plan

COMMENTS OF SOUTHERN CALIFORNIA EDISON COMPANY (U-338-E) ON THE

DRAFT GAP ANALYSIS / CHOICE ACTION PLAN

TABLE OF CONTENTS

Section Page

i

I. INTRODUCTION ....................................................................................................................................1

II. Actionable Recommendations for the CPUC ..................................................................................2

A. Articulate a long-term vision for California’s retail electricity market,

outlining the specific goals California is trying to achieve in the electric

sector, and use it consistently to evaluate current challenges and potential

solutions ...............................................................................................................................2

B. Clarify and exercise the Commission’s current enforcement capabilities,

and determine if additional enforcement authority should be requested

from the Legislature .............................................................................................................4

C. Initiate a process to determine what POLR model California wants to

implement and begin the process to get there ......................................................................5

D. Approving the IOUs pending Petition for Modification of the CCA Code

of Conduct Decision will enhance consumer protections and allow for

informed customer choice ....................................................................................................6

E. Gaps that should be low in priority or excluded from the Choice Action

Plan ......................................................................................................................................7

III. Choice is not A Goal, it is a Tool That Can Help Achieve the Core Principles if

Used Effectively...............................................................................................................................8

IV. Roles of Stakeholders May need to be Redefined ...........................................................................9

V. Reliability Requires a Specific Goal and a Plan To get There ......................................................10

VI. The Plan Should Maintain a Focus on Affordability .....................................................................10

VII. SCE Agrees Consumer Protections are Important But disagrees with some of the

draft plan’s recommendations ........................................................................................................12

A. Commission Decisions on Customer Data Privacy should not be revisited ......................12

B. If California pursues full retail competition, it should be done strictly on

an opt-in basis and customers must be able to make fully informed choices ....................14

C. Equitable cost allocation is an important means of protecting customers .........................15

VIII. CONCLUSION ..............................................................................................................................15

1

I. INTRODUCTION

Southern California Edison Company (SCE) respectfully submits these comments on the draft

paper entitled Draft Gap Analysis / Choice Action Plan (Draft Plan), issued October 23, 2018 by the

California Public Utilities Commission (Commission or CPUC) California Customer Choice Project

(Project) team.

SCE appreciates the Project team’s efforts to prepare the Draft Plan as the next step in the

development of a plan to address California’s evolving electric market and manage the transition. The

first step of this effort was the publication of the paper entitled California Customer Choice: An

Evaluation of Regulatory Framework Options for an Evolving Electricity Market (Choice Paper) in

August 2018. The Choice Paper discussed some of the changes occurring in the electricity sector as a

result of increased choices available to customers (such as changing energy supplier or electric rates, and

electing to use energy management services and distributed energy resources (DERs)). The Choice

Paper set the stage for discussion on these issues. The Commission’s next step was to develop a Choice

Action Plan “to help guide decision-makers on next steps in addressing these complex, and sometimes

interdependent, issues.”1 The Draft Plan is the beginning of that next step, expected to culminate in a

Final Gap Analysis / Choice Action Plan paper that incorporates stakeholder discussion from the

October 29, 2018 En Banc and written comments submitted by stakeholders.

SCE welcomes the opportunity to provide these comments, which focus on identifying priorities

and developing a process for resolving the gaps. The Project team’s work over the past year has created

momentum to address the important issues raised in the Choice Paper. It is important for the CPUC, the

California Energy Commission (CEC), and other stakeholders to take quick action to maintain that

momentum and begin solving the challenges at hand. It is also critical that the state have a long-term

vision for California’s retail electricity market to guide decisions and policies that will have a long-term

impact on that market and the state’s ability to achieve the Core Principles of decarbonization,

affordability, and reliability. The question of whether the choices available to customers in California

serve to advance state policy goals can only be answered in the context of a clearly articulated long-term

vision for the market. This is lacking in the Draft Plan but is sorely needed. Therefore, SCE’s comments

begin with specific actions it recommends the Commission take to continue the Project’s momentum.

SCE also discusses the need to prioritize some of the recommendations in the Draft Plan and identifies

1 Choice Paper, p. 68.

2

important considerations for the Commission and other stakeholders as actions are undertaken to address

the gaps identified in the Draft Plan.

II. ACTIONABLE RECOMMENDATIONS FOR THE CPUC

The Draft Plan has identified numerous issues and recommended actions for the Commission

and other stakeholders to consider. It would be difficult to address all of them at the same time. To assist

in prioritizing the Draft Plan’s recommendations, SCE has identified four actions that the Commission

should take in the near term (i.e., in the next six months). In addition, SCE has identified two gaps from

the Draft Plan that are lower in priority or can be removed from the scope of the Choice Action Plan.

A. Articulate a long-term vision for California’s retail electricity market, outlining the

specific goals California is trying to achieve in the electric sector, and use it

consistently to evaluate current challenges and potential solutions

The Choice Paper identified three Core Principles – decarbonization, reliability, and

affordability – on which California’s energy policies have rested since the 1970s.2 The Draft Plan

describes the Project team’s efforts to “identify the regulatory gaps that exist and the necessary actions

to ensure the core [principles]…outlined by the Choice Project are met.”3 SCE supports these Core

Principles as an enduring basis for California’s energy policy. However, to truly assess gaps associated

with increased customer choice, the state, the CPUC, and the CEC must first articulate a long-term

vision – or end state – for California’s retail electricity market to drive policies and decisions. The Draft

Plan appears to be problem-solving for customer choice, rather than driving a long-term vision that will

necessarily determine whether, or to what extent, choice is needed or appropriate for achieving state

goals. The final Plan should make this long-term vision the first priority, as all else flows from it.

In addition, SCE recommends the Commission and other stakeholders define specific

goals in the context of the principles. The goal for electric sector-specific decarbonization is largely

defined by Senate Bill (SB) 100. The goals around reliability and affordability are less clear. For

example, is the affordability goal defined by achieving the lowest electric rates possible? Or by having

energy bills comprise as small a percentage of wallet share as possible? Additionally, recognizing the

tensions among the Core Principles, the specific goals for each Core Principle need to be rationalized so

that they support each other. As SCE emphasized in its comments to the Draft Choice Paper, the

overarching prioritization of the principles should be decarbonization at the lowest possible cost without

2 Choice Paper, p. 7. 3 Draft Plan, p. 3.

3

compromising safety and reliability.4 Decarbonization cannot be achieved unless electric rates are

affordable, and achieving decarbonization by compromising reliability is unacceptable.

SCE commends the Commission’s efforts to define gaps, develop action plans, and set

forth a roadmap to help decision-makers begin to address these issues. However, without a persistent

focus on appropriately defined end goals as the lens through which all gaps and potential actions are

evaluated, SCE is concerned that legislative, regulatory, and stakeholder efforts will not move forward

in a coordinated way.

In addition, both the Choice Paper and the Draft Plan present broad choice in all areas

(e.g. retail provider, DER proliferation, etc.) as inevitable and uncontrollable. If certain aspects of

increased choice hinder or prevent the State from achieving the goals once established, both the

Commission and Legislature should take the necessary precautions to ensure the goal can be achieved,

even if it means limits on the choices or market participants.

SCE recommends two potential venues in which the Commission can advance specific

goals. First, the CPUC could work with the CEC to refresh the state’s Energy Action Plan.5 The Energy

Action Plan establishes specific goals to guide the actions of the IOUs and other participants in the

electric sector. For example, the first Energy Action Plan in 2003 adopted a loading order that

established a strong preference for meeting new energy needs with demand response and energy

efficiency, followed by renewable resources and distributed generation.6 This loading order has guided

procurement and customer program actions by the IOUs, the CPUC and CEC, and other stakeholders for

more than a decade. A similar outcome could be achieved if the Energy Action Plan were updated to

specify the State’s integrated goals in the areas of decarbonization, reliability, and affordability.

Second, SB 237 requires the CPUC to provide recommendations to the state Legislature

regarding potential further direct access (DA) expansion, while also ensuring state decarbonization, air

quality, reliability, and cost equity goals are met.7 The Commission should use the SB 237 report as an

opportunity to highlight the need for a long-term vision that will appropriately frame the questions

4 Comments of Southern California Edison Company (U 338-E) on the Draft Green Book, p. 3. 5 The Energy Action Plan was adopted by the CPUC and CEC to establish “shared goals and specific actions to ensure

that adequate, reliable, and reasonably-priced electrical power and natural gas supplies are achieved and provided

through policies, strategies, and actions that are cost-effective and environmentally sound for California’s consumers and

taxpayers.” A second Energy Action Plan was adopted in 2005 to reflect policy changes, and an update was made to the

plan in 2008. See “State of California Energy Action Plan” available at: https://www.energy.ca.gov/energy_action_plan/ 6 Energy Action Plan (2003), p. 4. Available at: https://www.energy.ca.gov/energy_action_plan/2003-05-

08_ACTION_PLAN.PDF 7 Public Utilities Code Section 365.1(e), as amended by SB 237 (Hertzberg, 2018).

4

raised in the Choice Paper and the Draft Plan on the impact of increasing customer choice on state

policies and drive solutions.

B. Clarify and exercise the Commission’s current enforcement capabilities, and

determine if additional enforcement authority should be requested from the

Legislature

The Draft Plan appropriately recognizes the existing gaps in the Commission’s

jurisdiction that will affect the state’s ability to comprehensively achieve its energy policies. Current

efforts pursuant to SB 350 and the Commission’s Integrated Resource Plan (IRP) proceeding, which has

a goal to optimize procurement planning across California to achieve decarbonization, already reveal a

fundamental weakness in the regulatory framework. In that proceeding, Community Choice Aggregators

(CCAs) and Energy Service Providers (ESPs) have challenged the Commission’s authority to enforce

IRP requirements or order them to procure resources pursuant to identified needs. SB 350 will

effectively be nullified if the Commission cannot enforce IRP requirements for all LSEs. Penalizing an

LSE for failure to comply with its IRP-established GHG goals does not provide adequate recourse,

because LSE failures could mean there are simply not enough resources in the market to serve load and

meet overall GHG reduction targets, nor does the Commission currently have adequate authority to

order non-IOU LSEs to fill the gap. Once a penalty is at issue, it is too late for the Commission to

course-correct. The checks cannot be done solely after the fact, but must be done along the way to

ensure that California remains on a trajectory to meet its goals.

The Commission’s limited jurisdiction over non-IOU LSEs raises other fundamental

concerns, both in terms of its policy goals and consumer protection. It will, for example, make any

contemplated changes in provider of last resort (POLR) service providers challenging, as SCE discusses

below. Rate design reform is another example where lack of Commission jurisdiction hampers

achievement of state goals. Since the first Energy Action Plan, the state has prioritized investments in

advanced metering and dynamic rates, and achieving these goals is threatened by the Commission’s lack

of authority to require default and mandatory Time-of-Use (TOU) pricing for generation rate

components for customers of non-IOU LSEs. The Commission also lacks the authority to require CCAs

and ESPs to offer net energy metering (NEM), while the IOUs are required to do so. In the case of a

CCA that declines to do so, all NEM customers would be incentivized to opt-out of the default CCA

service and remain with their IOU’s service – an inequitable result given that behind the meter (BTM)

resources are a relatively expensive way to achieve state decarbonization goals.

5

Given these issues, the Commission should make it a high priority to determine what

additional enforcement authority it needs over non-IOU LSEs, and to work with the Legislature to

promptly enact that authority.

C. Initiate a process to determine what POLR model California wants to implement

and begin the process to get there

The Draft Plan’s Gap Analysis on POLR is thorough and timely. Given current

accelerating changes in the California energy market, POLR issues should be prioritized among the top

issues the Commission and the state need to address.

The state’s IOUs currently provide a de facto POLR service, as the Choice Paper

acknowledges.8 The POLR is a critical role in the current procurement framework, which allows LSEs

such as CCAs and ESPs to enter and exit the market as they deem fit, and provides the Commission little

authority to protect customers from the impacts of these market disruptions. This is the main reason why

SCE has, for more than a decade, urged the Commission to implement the basic consumer protections in

Public Utilities Code Section 394.25(e),9 which currently provides the Commission the only effective

means of protecting customers from costs associated with an ESP’s or CCA’s exit from the market and

involuntary return of customers to the IOUs. While the Commission has issued Decision (D.) 18-05-022

to implement the financial security requirements and reentry fees for CCAs, the IOUs’ advice letters

proposing the tariff changes to implement the decision remain pending, stalling the implementation of

this longstanding statutory obligation.10

SCE appreciates the Draft Plan’s recognition that, as an increasing number of customers

depart IOU procurement services for other providers, it may not be reasonable to expect the IOUs to

continue to maintain adequate staff and operations to be ready at any time to assume procurement

services for any and all returning customers, particularly mass returns. However, if the IOUs no longer

provide POLR service, the state must ensure that any entity providing POLR service is financially

sound, has adequate experience in California retail electricity service, a track record of compliance with

LSE procurement obligations, and is subject to the Commission’s broad regulatory authority, including

for POLR service rate-setting and operations. It is questionable whether the Commission, with its

current authority, can adequately ensure safe, clean, affordable, and reliable POLR service by relying on

8 See Draft Plan, p. 21. 9 This section requires ESPs and CCAs to post a financial security requirement sufficient insurance to cover the

incremental procurement and administrative costs caused by their service termination and mass involuntary return of

customers to the IOU’s procurement service. 10 See e.g., SCE’s Advice 3840-E, filed August 15, 2018 pursuant to D.18-05-022.

6

contracts with POLR service providers and contract remedies (generally monetary damages) for failure

to perform. This raises a serious question of whether CCAs or ESPs would be willing to subject

themselves to the Commission’s broad regulatory authority for POLR service. The state may need to

consider mandating that CCAs and ESPs electing to enter the market must be willing to provide POLR

services as necessary, subject to the Commission’s oversight, absent some other model. Provisions for

adequate compensation for POLR service – including for the IOUs if they remain responsible for billing

customers for POLR service – and limitations on the ability of a POLR provider to exit the market, will

also be important.

No matter which entities provide POLR service, the state should continue to require LSEs

to indemnify customers for costs caused by the LSE’s failure or other exit from the market, and

involuntary return of customers to the POLR. The mechanisms adopted in D.18-05-022 will (when they

are finally implemented) be a step in the right direction with respect to CCAs; however, SCE remains

concerned that the protections are not robust enough to prevent cost shifting in the event of a mass

involuntary return, particularly in stressed market conditions.

Finally, it is important to clarify that the central buyer of Resource Adequacy (RA) under

consideration in the RA proceeding for short-term procurement11 is a separate role from the POLR,

which, by necessity, must play a long-term role to ensure that all customers have access to safe, clean,

affordable and reliable power. Both issues should be ranked high on the state’s and Commission’s

priorities for resolution.

D. Approving the IOUs pending Petition for Modification of the CCA Code of Conduct

Decision will enhance consumer protections and allow for informed customer choice

Information is essential to enhancing customer protection. Customers and local

communities must be able to make informed choices. Unfortunately, the current regulatory framework

substantially restricts the IOUs from providing local governments with timely, accurate, and meaningful

information regarding CCA programs. Customers are not well served if localities make uninformed

decisions because they have been able to hear only from certain constituencies. Without complete

information regarding CCA formation and operation, localities may adopt or implement CCA programs

without a full understanding of the benefits, risks, and costs of their decisions. This could result in

unintended negative consequences for customers served by the CCA, as well as for bundled service

11 See Draft Plan, p. 49.

7

customers who may face additional costs as a result of CCA program flaws or the return of customers to

bundled service.

Therefore, the Commission should promptly approve the IOUs’ pending Petition for

Modification (PFM) of D.12-12-036 (which adopted the CCA Code of Conduct) to allow the IOUs to

communicate with local governments regarding CCAs, particularly regarding CCA formation.

Modifying these substantial restrictions on IOU communications with local government officials

regarding CCAs would advance the public interest, would be consistent with California law, and is

necessary to ensure that the Code complies with the United States Constitution.

E. Gaps that should be low in priority or excluded from the Choice Action Plan

The following gaps from the Draft Plan are ones that, while important, SCE recommends

the Commission deprioritize in the context of the Choice Action Plan, either because they do not require

action in the near term, or are not highly relevant to customer choice:

Relief for Disconnection of Service During Periods of Natural Disasters Such as

Wildfires – this is an important issue that, as the Draft Plan acknowledges, the Commission is

appropriately addressing in Rulemaking (R.) 18-03-011. However, this issue does not seem greatly

affected by, or related to, customer choice.

Price Disclosure: All LSE Residential Rates and Product Offerings – the stated

purpose of this gap analysis is to consider a “single centralized location for residential consumers to

compare rates and product offerings, including terms of service, of all LSEs.” In SCE’s view, this issue

does not need to be a priority at this time. SCE also does not believe that creating a statewide platform

of all LSE prices for residential service is a reasonable or cost-effective means of addressing this

concern, given current market frameworks. Residential customers need to know the prices offered by the

IOU and the CCA in whose service areas they reside. A residential customer in Lancaster, for example,

should be able to easily access and compare the rates and programs of SCE and Lancaster Community

Energy. However, that same customer gains little to no benefit by accessing the prices of other LSEs in

California, unless and until Californians have full, opt-in retail competition (as in Texas). As for non-

residential DA customers, SCE agrees with the Draft Plan that ESPs are not likely to agree to public

price disclosure.12 Further, their pricing is not likely to take the form of standard-offer tariffed rates, like

the residential rates from the IOUs and CCAs, thus they are not easily comparable. For this reason, a

12 Draft Plan, p. 30.

8

statewide pricing platform would likely provide little benefit to customers, relative to the cost of

implementation.

III. CHOICE IS NOT A GOAL, IT IS A TOOL THAT CAN HELP ACHIEVE THE CORE

PRINCIPLES IF USED EFFECTIVELY

In its comments on the Draft Choice Paper, SCE noted that the final paper should make clear that

customer choice is not a core principle; rather, it is a tool that can help to achieve the Core Principles.13

The Draft Plan continues to equivocate on whether choice is a core principle. In fact, in some cases, it

seems to explicitly support choice as a goal unto itself.14 For example, in discussing rate design issues,

the Draft Plan notes that “treatment of legacy supply is front and center for resolution before

establishing a truly open, competitive market.” While SCE agrees with the principle of this statement, it

implies that the state’s objective should be to open the market to full retail competition, even though this

is an unresolved policy question, particularly absent a long-term vision for the California retail

electricity market.

The Draft Plan takes the focus away from the Core Principles by framing gaps around disparate

categories of issues (i.e., Consumer Protection and Duty to Serve are not always clearly linked back to

the Core Principles). While these are essential issues to consider, the Draft Plan deviates from what, in

SCE’s view, should be its objective: 1) to provide a consistent and clear view of current market

conditions relative to achieving decarbonization in the most affordable manner possible while

maintaining safety and reliability, 2) to assess whether customer choice, in its current form, helps or

hinders this progress, and 3) to recommend how to address the gaps where choice hinders achievement

of the Core Principles. It is important to recognize that expanding customer choice is not a foregone

conclusion, rather a product of the statutory and regulatory constructs put in place by California

decision-makers. Where choice is supporting the state’s achievement of its Core Principles and goals,

decision-makers should continue to encourage choice. If there are instances in which choice is hindering

achievement of the goals, the state should not be reticent to course-correct.

13 Comments of Southern California Edison Company (U 338-E) on the Draft Green Book (June 11, 2018), at 3. 14 For example, in discussing rate design issues, the Draft Plan notes on page 36 that “treatment of legacy supply is front

and center for resolution before establishing a truly open, competitive market.” While that may be true, this statement

implies that the state’s objective should be to open the market to full retail competition; in SCE’s view this is an open

policy question that must be decided through legislative action.

9

IV. ROLES OF STAKEHOLDERS MAY NEED TO BE REDEFINED

The Draft Plan states, “As retail electric providers expand and become more disaggregated, the

role of the IOUs is changing from bundled service to supplying distribution grid services for CCAs,

ESPs, and BTM products.”15 It also poses the question, “What are the options for utilities that continue

to provide retail electric service with other LSEs in an open market or would they be barred from the

retail market like in Texas?”16 SCE agrees it is important to understand what role the IOUs, as well as

non-IOU LSEs and the Commission, will play in the future, but emphasizes that it is critical to first

determine California’s long-term vision for the market to help determine those roles.

At the June 22, 2018 En Banc, CPUC Commissioners Peterman and Guzman Aceves noted that

the CPUC implements many state policies via its broad regulatory jurisdiction over the IOUs and that

this vehicle for implementing policy is challenged as more customers depart IOU procurement service or

reduce their energy usage with DERs.17 If that channel for implementing policy continues to erode, the

Commission and the Legislature must determine how to reinforce the Commission’s authority to

establish policies and requirements that drive state policy.

As the future role of the IOUs in retail procurement is discussed, SCE reminds stakeholders that

the IOUs, through their ownership and management of the grid, will continue to be the state’s most

effective policy delivery mechanism for the electric sector, and in fact may remain the only entity

through which the Commission can reach all customers.18 In addition, as the Draft Plan accurately notes,

the IOUs’ creditworthiness and low risk profile were critical in California being able to get renewable

power from cost-competitive, long-term contracts, which enabled programs like the Renewables

Portfolio Standard, and helped to bring down solar costs for all customers.19 Other technologies continue

to emerge that require upfront investment and long-term commitments to enable costs to come down to

make the technology more affordable for all Californians. Whether to serve as a tool of the Commission

to implement policy, or to own and operate a clean, affordable, and reliable grid, the IOUs must remain

financially strong.

15 Draft Plan, p. 44. 16 Id. 17 CPUC and CEC. Customer Choice/ Green Book En Banc. (June 22, 2018). Available at:

http://www.adminmonitor.com/ca/cpuc/en_banc/20180622/ 18 As the Choice Paper notes (p. 30), poles and wires are not customer choices, and the utilities will continue to provide this

service. As such, utilities are the only entities that reach all customers in a distribution service area. 19 Draft Plan, p. 46.

10

V. RELIABILITY REQUIRES A SPECIFIC GOAL AND A PLAN TO GET THERE

The Draft Plan properly acknowledges several challenges related to reliability and RA as a result

of increased fragmentation. The Draft Plan recommends “Further actions may need to be considered to

address disaggregation of load as occurred in the process leading to the adoption of Resolution E-4907

in early 2018” and that the Commission “monitor its current [RA] efforts and assess where additional

action may be needed within the existing proceedings.”20 Reliability of the electric sector is too critical

to California to just monitor an existing proceeding focused on interim and short-term solutions. A

reliable electric grid is important for safety, the economy, and achieving California’s decarbonization

goals. An effective and sensible outcome on reliability will not happen naturally. It requires the State to

have a long-term vision and end-state fully articulated, and to define specific goals and develop a plan to

get there. Long-term RA planning is a clear example of where a lack of long-term vision can lead to a

compromised ability to achieve the state’s Core Principles. It is not sufficient to simply identify, through

a planning process, which broad categories of resources will support an orderly transition away from

natural gas generation. Rather, the state must develop a long-term plan to retain specific existing

resources until they are no longer needed. The current one-year RA framework will not accomplish this

task. Given the need for long-term planning and likely multi-year procurement, a system in which LSEs

perform procurement with unknown future load quantities presents difficulties. The Commission needs

to expeditiously examine the current mechanism and potential alternatives to accomplish this orderly

transition while ensuring long-term reliability.

VI. THE PLAN SHOULD MAINTAIN A FOCUS ON AFFORDABILITY

The Draft Plan reorients the Gap Analysis around Customer Protection, Duty to Serve, and

Reliability and Energy Procurement instead of the Core Principles. While Duty to Serve and Reliability

and Energy Procurement seem to address some decarbonization and reliability issues, the gap

categorization has deemphasized affordability. The Draft Plan, in fact, makes very little mention of

affordability as a policy objective or Core Principle.21 SCE agrees that customer protection is an

important consideration, particularly in a market in which the Commission has increasingly less

jurisdiction over a growing number of LSEs, and encourages the Commission to continue to consider

20 Draft Plan, p. 42. 21 At one point, the Draft Plan replaces affordability with consumer protection among the three Core Principles. See Gaps

Analysis/Choice Action Plan at 3; (“The Choice Project team looked at the critical policy issues associated with

increased disaggregation of load and supply and conducted an internal analysis to identify the regulatory gaps that exist

and the necessary actions to ensure the core principals — decarbonization, reliability, and consumer protection –

outlined by the Choice Project are met.”) (emphasis added).

11

these issues, as addressed below. However, it is essential that the Commission and state decision-makers

not lose sight of affordability as a Core Principle.22

Affordability is important because it affects customers’ budgets and the state’s economy

generally, but also because the state will not be able to achieve its decarbonization goals if electricity

becomes too expensive. Transportation is currently the single largest GHG-emitting economic sector in

California, accounting for 41% of emissions and far outpacing any other sector. 23 SCE’s analysis has

shown that high levels of electrification, along with continuing electric sector decarbonization, will be

needed in the next 12 years for the state to achieve its 2030 GHG emissions reduction mandates.24

Further, SB 100 indicates a sector goal to serve 100% of its retail sales with non-emitting resources by

2045. These electric sector investments will put upward pressure on electricity prices. The state,

however, cannot expect consumers to choose technologies such as electric vehicles if the fuel source

becomes unaffordable. For this reason, SCE requests the Commission clearly and explicitly identify how

customer choice is affecting the state’s ability to achieve affordability in the Gap Analysis/Choice

Action Plan paper and subsequent Roadmap.

Affordability is not only about managing costs, rather there is also a need to evaluate, and take

necessary steps to improve, rate equity and transparency. Consistent with Commissioner Guzman

Aceves’ comments at the October 29 En Banc, SCE is concerned about customer choice being a catalyst

for bundled customers taking on an outsized burden to accommodate other customers’ energy choices.25

The Draft Plan acknowledges that current rate design may not appropriately reflect fixed cost recovery,

and SCE agrees this should be examined. However, it also primarily focuses on how rates affect the

deployment of BTM and preferred resources.26 SCE is concerned that this focus is too narrow. First, it is

worth noting that while SCE supports customers’ ability to choose BTM resources, explicitly designing

22 The Commission issued the Affordability OIR (R.18-07-006) in July 2018 “to develop a common understanding and

tools to assess, consistent with Commission jurisdiction, the impacts on affordability of individual Commission

proceedings and utility rate requests.” 23 See California Greenhouse Gas emissions Inventory – 2018 Edition, California Air Resources Board. Accessible at:

https://www.arb.ca.gov/cc/inventory/data/data.htm 24 Specifically, SCE’s analysis shows that the state will need 7 million vehicles and one-third of space and water heating to

electrify, alongside deep electric sector decarbonization. See SCE’s Clean Power & Electrification Pathway, October

2017. Available at: https://www.edison.com/content/dam/eix/documents/our-perspective/g17-pathway-to-2030-white-

paper.pdf 25 CPUC and CEC (October 29, 2018) En Banc Hearing of the California Public Utilities Commission and the California

Energy Commission: Draft Gap Analysis/Choice Action Plan. p. 152. Available at:

http://www.cpuc.ca.gov/uploadedFiles/CPUCWebsite/Content/UtilitiesIndustries/Energy/EnergyPrograms/Infrastructure

/DC/CEC%20En%20Banc%2010.29.pdf 26 Draft Plan at 37-38.

12

rates to encourage adoption of these resources does not lead to LSEs achieving decarbonization in the

most affordable way. The Commission’s own analysis shows that system decarbonization scenarios that

include high levels of BTM solar adoption are far more expensive on a total resource cost basis than

those with lower BTM adoption.27

Further, those costs, under current rate constructs, are not evenly distributed across customers.

Customers who choose to not install BTM resources bear an outsized burden of cost shifts, attributable

to current BTM compensation structures. The Commission should focus on ensuring that customers who

do not, or especially cannot, choose BTM technologies are not expected to take on additional costs to

accommodate other customers’ choices. SCE recommends that the Gap Analysis/Choice Action Plan

address these questions of rate equity in the context of affordability and customer protection by focusing

on the effect of increased customer choice on all customers, including those who do not install BTM

resources. Specifically, the next NEM proceeding should be included in the Gap Analysis/Choice Action

Plan as another venue where affordability and rate design equity and transparency should be addressed.

VII. SCE AGREES CONSUMER PROTECTIONS ARE IMPORTANT BUT DISAGREES

WITH SOME OF THE DRAFT PLAN’S RECOMMENDATIONS

While SCE urges the Commission to maintain a focus on affordability as a core principle, SCE

agrees with the Draft Plan that consumer protection is an important area of consideration when

discussing customer choice. SCE discusses some of the key considerations and recommended actions for

the Commission to contemplate regarding consumer protections.

A. Commission Decisions on Customer Data Privacy should not be revisited

The Draft Plan’s Gap Analysis on customer-specific data access is concerning, as it

seems to suggest that electricity customers should have less control over their personally identifiable

information (PII), rather than more. Consistent with California laws on privacy, the Commission should

continue to ensure adequate and necessary protections on electricity customers’ PII, rather than seek to

make it more widely available to market participants absent customer consent. This is particularly

important when the Commission has little or no jurisdiction over the vast majority of market participants

that seek to access and use PII (e.g., DER providers) to ensure they use and maintain PII in a manner

consistent with law.

SCE agrees with the Draft Plan that it is useful for the Commission to devote attention to

ensuring that utility customers have convenient ways of authorizing their IOU to provide and terminate

27 See R.16-02-007. Proposed Reference System Plan (9/18/2017) at 78, 80.

13

third-party access to PII, including the kinds of data the customer wishes to make available to a third

party. The Draft Plan points to Resolution E-4868 as an example of this, and SCE supports such efforts.

Beyond this, the Draft Plan provides no compelling case for rewriting decades of thoughtful

Commission decisions on customer data privacy. The state needs to prioritize and solve critical issues

that directly affect decarbonization, affordability and reliability. Revisiting the Commission’s decisions

on utility customer data privacy / third-party data access is not one of them. The Commission’s existing

framework, which is based on nationally accepted Fair Information Practice Principles, appropriately

recognizes that utility customers own their PII and have the right to give or withhold consent to access

by third parties as they see fit. Written consent of the customer is and should continue to be required for

the IOU to give a third party access to any utility customer PII. Otherwise, the Commission can mandate

customer data disclosure by the IOUs, but the mandate must be consistent with privacy laws and the

IOUs must be absolved from downstream liability for complying with a mandated disclosure.

The Draft Plan is misinformed on a number of issues it claims give rise to the need to

revisit the Commission’s customer data privacy decisions. For example, it states that “[c]urrently, prior

to formation, CCAs are only eligible to receive aggregated data.”28 This is incorrect. Pursuant to the

IOUs’ CCA information tariffs, local governments examining CCA feasibility can request access to

customer-specific information for all non-residential customers, which typically represent the majority

of the electricity load being evaluated for CCA service.29 Due to privacy concerns, however, the

Commission rightly decided that customer-specific information on residential customers would not be

made available (absent customer consent) unless and until the CCA is registered with the Commission

and has submitted an implementation plan that satisfies the requirements for financial viability, bonding,

and other consumer protections, among other things.30 Once the CCA begins to serve customers, it has

access to customer-specific data for all CCA customers. Thus, there is no “gap” here. Given the growing

number of CCAs across California, local governments have clearly been able to access the information

they need to conduct CCA feasibility evaluations. The CCA information tariffs strike an appropriate

balance between customer data privacy and CCA data access needs.

28 See Draft Plan, p. 10. 29 See e.g., SCE’s Schedule CCA-INFO, Special Conditions 2 and 4. SCE’s Standard Output File provides “customer

account name, service account, service address, mailing address, email address, monthly usage (kWh), monthly peak

demand (kW) where available, rate class average load profiles, rate class average coincident peak factors for all accounts

within a CCA’s jurisdiction,” in accordance with Special Conditions 2 and 4.

30 See id., Special Condition 4.

14

Another example is the Draft Plan’s incorrect statements regarding data aggregation

rules. The default aggregation is the 15/15 Rule, which was adopted at the outset of DA in 1997 and is

set forth in the IOUs’ CCA information tariffs.31 D.14-05-016 provides the customer data aggregation

rules specifically applicable to the IOUs’ quarterly website presentments of customer data.32 D.14-05-

016 did not nullify the “15/15 Rule” for data aggregation, so SCE still uses it to process other

disclosures of aggregated customer data outside of the compliance requirement for a web presentment of

data in D.14-05-016.

In addition to aggregated data, local governments may access anonymized customer data,

subject to conditions set forth in D.14-05-016. The aggregated and anonymized data sets provide local

governments with a vast amount of useful utility customer data for purposes of climate action planning.

There is no need to revisit these carefully designed rules, which the Commission adopted after vetting a

robust record and balancing customer data privacy with data access needs of local governments. The

Commission-adopted and required non-disclosure agreement for research institutions also remains

entirely appropriate, given the PII the IOUs are mandated to disclose to qualifying institutions, and the

downstream liability exposure should the data be breached or misused following that disclosure.

B. If California pursues full retail competition, it should be done strictly on an opt-in

basis and customers must be able to make fully informed choices

The Draft Plan raises slamming and cramming as a consumer protection issue, and notes

that it has not been a concern in the DA market to date;33 however, it makes no mention of CCA service

and the possibility that many customers may not be aware that they are being defaulted to CCA service.

Given that the Commission is directed in SB 237 (Hertzberg) to provide recommendations to the

Legislature on implementing further reopening of DA service, the Commission should consider whether

full retail competition – if California goes in that direction – should require that all customer choice

options be on an opt-in basis, including CCA service, so that it is truly a choice the customers make as

opposed to a choice made on their behalf. Additionally, the Commission should consider whether it

31 See SCE’s Schedule CCA-INFO, Special Condition 1. 32 D.14-05-016 directed the IOUs to post on a quarterly basis the total number of customers and total monthly sum and

average of customer electricity/gas usage by Zip Code for each customer class for the previous 12 months, using the

aggregation standard of a minimum of 100 customers for residential, minimum of 15 for commercial/agricultural with no

single customer constituting more than 15% of the total consumption, and minimum of 15 for industrial with no single

customer constituting more than 15% of the total consumption. 33 See Gap Analysis, p. 24.

15

needs the statutory authority to enforce certain rate design measures, such as default TOU for all

residential customers and mandatory TOU for all non-residential customers, irrespective of LSE.34

Moreover, customers must be able to make informed choices. As SCE explains in Section

II.D of these comments, the Commission should promptly approve the IOUs’ pending PFM of D.12-12-

036, adopting the CCA Code of Conduct, to allow the IOUs to communicate with local governments

regarding CCAs, particularly CCA formation. This will provide elected officials tasked with the

important decision of whether a locality should form a CCA with timely, accurate, and meaningful

information related to that decision.

C. Equitable cost allocation is an important means of protecting customers

SCE is pleased with the Draft Plan’s recognition that the Commission’s decisions in the

PCIA OIR ensure that “customers who remain with an IOU are not required to pay costs the utility

incurred on behalf of customers who left the utility to become customers of a CCA or ESP and that

departing customers do not take on costs that were not incurred on their behalf.”35 Equitable cost

allocation is a critical element of consumer protections, and the PCIA OIR decisions represent important

steps in the right direction; however, more needs to be done in this regard. The Commission needs to

promptly approve the IOUs’ advice letters pursuant to D.18-05-022 on the CCA Financial Security

Requirements and Reentry Fees, which were adopted by the Legislature in the consumer protection

provisions of AB 117 (2002), but have yet to be implemented.36 The Commission needs to ensure that

the costs of procurement the IOUs are required to do to advance state or federal policies on behalf of all

customers (e.g., BioMAT, ReMAT, PURPA, etc.) are broadly allocated to all customers. Today, only

the IOUs’ bundled service customers pay for the costs of these public policy-based procurements, which

is not equitable or sustainable. For this reason, SCE was pleased to see the Energy Division’s recent

Staff Proposal on BioMAT to (among other things) allocate BioMAT costs through a non-bypassable

charge to all customers in the IOUs’ service areas.37

VIII. CONCLUSION

SCE appreciates the opportunity to submit these comments, and looks forward to working with the

Commission and other stakeholders to create and execute the Choice Action Plan.

34 See id., p. 38, discussing the need for default TOU rates for residential CCA customers. 35 Gap Analysis, p. 36. 36 See e.g., SCE’s Advice 3840-E, filed August 15, 2018 pursuant to D.18-05-022. 37 See October 30, 2018 Bioenergy Market Adjusting Tariff (BioMAT) Program Review and Staff Proposal, at pp. 2, 18.