San José, CA. December 5, 2019 – A broad coalition of elected officials led by San José Mayor Sam Liccardo has unveiled a set of seven Operating Principles to transform Pacific Gas and Electric (PG&E) into a customer-owned utility. Support for the Mayor’s plan — first announced in his and other officials’ letter to the California Public Utilities Commission (CPUC) last month — has increased by a factor of five. The plan is now endorsed by a coalition of 114 elected leaders from 58 cities and 10 counties who represent more than 8 million Californians — a majority of all customers served by PG&E.
“With these principles, we’ve presented a framework for a viable customer-owned PG&E that will be transparent, accountable, and equitable,” said Mayor Liccardo. “I’m proud to stand with our growing coalition of 114 elected leaders — who together represent more than half of Californians served by PG&E — urging the company’s transformation to put its days of underinvestment, mismanagement, and negligence far behind us.”
The Operating Principles outline how a successful customer-owned utility would operate, and aim to add transparency to the Mayor and coalition’s plan. The Principles also commit to preserving existing PG&E labor contracts and skilled workers. They cover seven categories:
- Geographic Inclusion and Equity
- Governing Board Responsibilities and Selection Process
- Labor and Workforce
- Power Supply Procurement
- Public Accountability
- Rate Impact and Credit Quality
- Safety and Response
Read the full set of operating principles pasted below, or download the document.
Through the holiday season, Mayor Liccardo will continue outreach to additional elected officials, stakeholders, and customer groups to expand the coalition advocating for a PG&E that serves customers, rather than investors.
Customer-Owned Utility – Operating Principles
Geographic Inclusion and Equity
- The customer-owned utility will not seek to sever any geographic portion of the current PG&E service area.
- Governance and operations will prioritize ensuring that no disparate negative impact is borne by any specific region, county, or city, as a result of the transformation of the utility from investor-owned to customer-owned.
Governing Board Responsibilities and Selection Process
- The fiduciary duty of the Governing Board will be to the customer-owners.
- Governing Board will assume ratemaking and capitalization responsibilities in place of CPUC regulation.
- Interim Governing Board nominees will be presented in the Bankruptcy Process.
- Selection of Governing Board members will be through a two-step process, with a nominating committee patterned on the CAISO selection process, vetting candidates for election.
- Governing Board will oversee the management of the organization, hire and/or retain senior management.
- Organization charter will require board members to meet qualification requirements of competence, independence, and specific skill sets (e.g., utility expertise, safety, cyber-security, infrastructure, management).
Labor and Workforce
- The customer-owned utility will preserve existing PG&E labor contracts and preserve the existing skilled workforce.
- The customer-owned utility will commit to maintaining and growing a skilled workforce that is focused on improving the safety and reliability of the utility’s infrastructure, as well as improving customer service and affordability.
Power Supply Procurement
- The customer-owned utility will be subject to all State requirements requiring renewable energy procurement, energy efficiency initiatives, and emission reductions as they relate currently to the investor-owned utilities.
- Existing contracts with independent power producers would be maintained and respected.
- The customer-owned utility will support local efforts to administer and implement public purpose programs such as energy efficiency and renewable energy incentives programs funded through the public goods charge. Primary responsibility for power supply procurement in areas where qualified Community Choice Aggregators (CCA’s) already procure power will shift to those qualified CCAs, who will become the provider of last resort (POLR) in their territory. “Qualified” CCAs will meet good utility practices, including adopting risk management policies and procedures, maintaining a bond rating, retaining adequate operating reserves, and establishing limits on uses of ratepayer funds. The customer-owned utility will serve the remaining customers whose communities choose not to form a CCA.
- The customer-owned utility will support new CCA formation and options to reduce costs for all ratepayers including options to reduce and stabilize the Power Charge Indifference Adjustment (PCIA) and other non-bypassable utility charges.
- Notwithstanding “private” entity legal status, the customer-owned utility will operate as though it were a public agency with regard to transparency and accountability of decision-making. That includes:
- Adherence with applicable public record and open meeting rules, including the Brown Act and Public Records Act.
- Prohibitions on organized political contributions.
- Outreach to underserved communities.
- Goals for supplier diversity including women, minority, disabled veteran, and LGBTQ contracting and employment.
- Other important public policy objectives.
Rate and Credit Quality
- The customer-owned utility will be committed to low-cost financing for capital investments needed to maintain the grid, adhere to safety and reliability standards, realize energy policy objectives, and improve customer affordability.
- By charter, the organization will be required to maintain investment-grade credit quality.
- The current balance of rate allocation between urban and rural customers will be maintained.
- The customer-owned utility will commit to ensuring continued rate discounts for low-income residents (through the CARE program and similar initiatives).
- The customer-owned utility will continue to offer the same Net Energy Metering (NEM) rates for customers with on-site solar as did PG&E. The customer-owned utility will fully grandfather NEM rates for existing NEM customers and any future changes to NEM will apply only prospectively for new NEM installations.
- As a not-for-profit, rates will not include any profit. Rates will be set to maintain adequate reserves and all excess revenues will be reinvested into the communities served by the customer-owned utility.
Safety and Response
- The customer-owned utility will be subject to state agency standards and oversight relating to health, safety, and wildfire protection.
- The customer-owned utility will develop a transparent, prioritized capital investment plan to address infrastructure needs of both the distribution and transmission system to prevent wildfires, reduce Public Safety Power Shutoff (PSPS) events, and improve overall system reliability.
- Required PSPS events will be based on best practices, with a transparent decision-making structure, emphasis on coordination with local first responder and emergency service agencies, and high-quality customer communication.
- The customer-owned utility will fully support the development of distributed energy generation and storage, including local micro-grids.