The California PUC has issued a final paper in its Customer Choice Project entitled “California Customer Choice: An Evaluation of the Regulatory Framework Options for an Evolving Electricity Market.” The Choice Paper does not set forth specific recommendations but rather raises issues for consideration in the evolution of California’s electricity market. This includes a review of the implementation of retail choice and CCAs in New York, Illinois, Texas and Great Britain. It also includes a review of future role of the regulated utility.

The Choice Paper describes next steps as follows:

“The next step for the Commission is to develop the Choice Action Plan to help guide decision-makers on next steps in addressing these complex, and sometimes interdependent, issues.

The Choice Action Plan will set forth objectives and present concrete actionable items as well as recommendations needed to meet California’s overarching Core Principles of energy policy: affordability, decarbonization, and reliability. The Project Team will present a detailed work plan to the Commission for consideration that the CPUC can implement to address the issues arising from the evolving electricity market and increasing customer choices in California.

In conjunction with the CPUC Legal, Administrative Law Judge and Energy Divisions and based on stakeholder input since May 2017, the Customer Choice Project Team will:
• perform a gap analysis which will examine the fundamental questions raised in the draft paper [and] identify critical issues to resolve,
• map current CPUC (and other agencies’) proceedings that address these issues,
• identify the outstanding matters that require further analysis, and
• solicit public input for solutions that will lead to specific outcomes.

Stakeholder input is an essential component of this process. Interested parties have provided informal written comments and had an opportunity to participate at the two en bancs held in May 2017 and June 2018 and the October 2017 Informal Workshop. There will be further opportunities for public input on the gap analysis and proposed Choice Action Plan. The next steps are outlined below:

• August Issue Final Choice Paper
• July/August Perform Gap Analysis/Create Draft Action Plan
• What are the issue(s)?
• What are the recommended approaches to remedy the issues?
• Is a specific issue currently being considered in an existing CPUC proceeding?
• If so, what should be done in that forum?
• If not, what is the appropriate forum for action? (either at the CPUC or elsewhere)
• Provide the rationale for recommendations August 2018
• September Issue Gap/Analysis and Draft Action Plan for Public Comment
• October Hold Public Workshop on Draft Action Plan”

The full text of the Customer Choice Paper is available on the NEM Website.

The Commission issued an order initiating its 2018 biennial review of electric standard offer service (SOS). The Commission identified the following specific questions for comment in this review:

* What is the appropriate return for Pepco to earn as SOS Administrator? What should be the relationship between this return and cash working capital?
* Should the adder be eliminated? If so, why; if not, why not.
* Should the 12-month minimum stay provision for commercial customers be eliminated? If so, why; if not, why not.
* Should a certain percentage of the SOS load be procured through long-term PPAs for renewable energy generation (“clean energy PPAs”)? If so, what should that percentage be? What percentage of the SOS load should continue to be procured through the Wholesale Full Requirements Service Agreement?
* Should the clean energy PPAs supply energy for all customers classes – Residential, Small Commercial, and Large Commercial – or only some classes?
* What is the optimum contract term for clean energy PPAs? 5 or 10 years or longer? Should there be one contract term for all clean energy PPAs or a mix of contract terms?
* What renewable sources should be included in long- term clean energy PPAs? Wind and solar only, or should additional sources such are biomass and hydro or other Tier One resources be considered?
* What would the impact of the implementation of clean energy PPAs be in terms of the estimated reduction of GHG?
* Assuming less than 100 percent of the SOS is procured through clean energy PPAs, what impact, if any, will the use of PPAs have on the bid prices for the remainder of the SOS load?
* States can procure their SOS energy and RECs (including solar renewable energy credits (SRECs)) to meet their Renewable Energy Portfolio Standards in a bundled fashion or purchase them separately. Which method is more economical for long-term purchase agreements? Which method will better promote the goal of reducing GHG?
* Will the use of clean energy PPAs for SOS energy bundled with RECs and SRECS have any impact on the retail market for RECs and SRECs?
* If, as part of the procurement of SOS generation, the clean energy PPAs are entered into with extremely low per kWh prices, how would this affect competition between SOS and competitive electricity suppliers?
* How can the Commission avoid a scenario where clean energy PPAs are entered into for what may turn out to be at rather high prices, especially in the out years, and a large proportion of SOS customers migrate to competitive electricity suppliers as a result? (Under this scenario, substantially more generation would be procured than what is needed, resulting in excess generation being sold at a loss and thus increasing the remaining SOS customers’ costs per kWh of electricity.)
* Would the use of long-term clean energy PPAs for SOS procurement be viewed by the credit agencies (Moody’s, S&P, and Fitch) as an increase in Pepco’s debt and, thereby, adversely impact Pepco’s credit worthiness? If yes, could this be avoided by Pepco restructuring its position as the SOS administrator or by the use of a third-party entity as the SOS administrator?
* Would clean energy PPAs constitute an out-of-market financial subsidy to renewable energy generation facility owners that sell wholesale electricity supply services in PJM’s markets? And, if yes, would such subsidies have an adverse impact on the PJM capacity market’s ability to promote robust supply competition and the selection of the least-cost supply resources?

The Commission also indicated it would accept comments on "any other recommended changes to the SOS program in light of competitive developments in the District of Columbia."

The full text of the Order is available on the NEM Website.