Dive Brief:

• California non-residential energy customers could be free to purchase electricity from companies that are not electric utilities if a new bill in the state legislature succeeds in removing caps on direct access. ClimateWire reports that backers are pushing the bill as a way to boost clean energy in the state. 
• The just-introduced California Senate Bill 286 would remove a 12% electric demand limit on direct access, through which non-residential power customers buy directly from energy service providers (ESPs) instead of from utilities. A waiting list of 6 billion kilowatt-hours, or about 25% of the state’s load, presently wants at the savings that companies and institutions like Google and the University of California now get.
• Utilities are expected to oppose the bill because competition would compromise their revenues. Ratepayer advocates are expected to oppose it because utility losses could be shifted to non-participating utility customers. The tech community, however, supports it, as it could give them an outlet for excess renewable energy generation.

Dive Insight:

The direct access program was restricted in California after the 2000-01 energy crisis. In response to ratepayer furor over rolling blackouts, regulators became more concerned about reliability than competition and limited electricity sales to utilities. Senate Bill 695 opened it in 2009 to non-residential customers on a limited basis. 

"Direct access represents an ideological challenge to the utility business model," said Center for Energy Efficiency and Renewable Technologies Director V. John White. That is why they are “very aggressive in arguing why it shouldn't be allowed."

Protections for utilities and ratepayers in other states with direct access require ESPs to use some of their revenues to reimburse utilities for transmission and distribution system costs, but observers note that the practice can increase prices.

Tech giants like Apple are anxious to participate. Many have invested in renewables and could sell the power to themselves through direct access. They could also become ESPs and market unused renewables.

ESPs already must meet California’s 33% by 2020 renewables mandate. Because many California companies will buy renewables regardless of the price and want the opportunity to do so directly from ESPs instead of going through utilities, White proposed legislators pass SB 286 but impose a higher renewables mandate on them.