CONTACT: Dianne Dienstein May 6, 1997 CPUC - 17
415-703-2423 (R.94-04-031/I.94-04-032)

ELECTRIC MARKET OPEN TO UTILITY CUSTOMERS IN 1998

The California Public Utilities Commission (CPUC) today described how all investor-owned utility customers, regardless of customer class (residential, commercial, agricultural, industrial) or amount of electricity used, will be able to choose their energy supplier when California's electric services market becomes competitive next year.

Consumer Choice and Direct Access

Beginning January 1, 1998, all competitors can offer electric service to customers of Pacific Gas & Electric, Southern California Edison, San Diego Gas & Electric, Kirkwood Gas & Electric, PacificCorp, Sierra Pacific Power Company, and Southern California Water Company. And customers of these utilities can choose either of these direct access options to purchase power:

• through competing nonutility retail electric service providers such as brokers, marketers, aggregators or other retailers, or
• through direct negotiated contracts with electric generators.

Direct access is a choice for consumers. Consumers who do not want direct access, or to change how they currently receive electric service, do not have to do anything. Their current utility will continue to serve them. A customer who chooses direct access, but later wishes to return to utility service can do so after giving the utility adequate notice.

Utilities (or 'utility distribution companies' as they will be called in the new market) will provide distribution services to all consumers regardless of their choice of electricity supplier, and will be responsible for service connection and disconnection. The CPUC will continue to regulate utilities and their prices for distribution service and ensure they meet their service obligations to customers.

Utilities will begin accepting direct access requests on November 1, 1997 to become effective on or after January 1, 1998. Customers who request direct access and have at least half of their electrical load supplied by a renewable resource provider will have their requests processed first. All consumers won't instantaneously shift to direct access on January 1, 1998. It is more likely there will be a gradual interest in and migration to direct access.

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All investor-owned utility customers must pay the competitive transition charge whether they choose direct access or not.

How Customers Can Participate in Direct Access

To be able to have direct access, customers with a maximum demand of 20 kW or more must have a meter with hourly (at minimum) metering. Residential, commercial, agricultural and other customers who use less than 20 kW can participate either by installing an hourly meter or through load profiling. By way of comparison, an average individual household with every appliance and light turned on would have a maximum demand of 1 kW. An hourly interval meter records usage in hourly increments and can be read on a daily or monthly basis.

Load Profiling - An Option for Individual Consumers

It would take years to provide hourly interval meters for all 10 million electric customers in the state. Of the 40,000 industrial and large commercial utility customers, about half can record usage hourly. Of the 1.5 million commercial and agricultural meters, only 10 percent can do so, and current residential meters do not record hourly electricity use. Load profiling is therefore an alternative for those smaller customers who want direct access.

Load profiling approximates how much electricity a customer class or group of customers uses hourly over a given period of time. If load profiling is used for a customer, instead of being billed for actual use, the customer is billed according to the authorized load profile for that type of customer. Load profiling will facilitate aggregation by small customers for direct access.

How Direct Access Will Work

Within the next 30 days, utilities are to meet with interested parties and begin to develop direct access implementation plans. By July 1, utilities are to submit their direct access implementation plan for Commission approval, and describe procedures they will use to manage direct access requests.

Comments on the plans are to be filed by July 18. The Commission will accept or reject the plans by September 17.

All investor-owned utilities must follow and include in their plans these standards:

• Begin accepting direct access requests on November 1, to become effective on or after January 1, 1998.
• Process direct access requests as quickly as possible, on a first-come first-served basis.

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• Requests received on or before the 15th of any month will be switched over during the next month's billing cycle.
• Put appropriate safeguards in place to protect customers from unauthorized or inadvertent charges.
• Submit a monthly report to the CPUC Energy Division starting November 15, 1997 which reports for the previous month by customer class: number of direct access requests, number processed, number of customers switched to direct access, number of customers switching direct access providers, and average backlog of requests. This will enable the Commission to track market development and quickly address any problems which arise.

A contingency plan will be in place in case the new competitive market cannot handle the volume of direct access transactions, or the success of the marketplace is threatened during the first 12 months of operation.

The Commission has established rules governing the relationship and transactions between utilities and their affiliates to prevent them from dominating the new competitive electric market.

Retailers Must Register With the CPUC

Aggregators, brokers and marketers are considered 'retailers' because they serve end-use customers. An aggregator is any marketer, broker, public agency, city, county or special district that combines the loads (amount of electricity used) of many customers to facilitate sale and purchase of electricity, transmission and other services for those customers. A broker arranges the sale and purchase of electricity, transmission and other services between buyers and sellers. A marketer buys

electricity, transmission and other services from utilities and other suppliers and then resells those services at wholesale or to end-user customers. Any marketer or broker serving more than one customer could also be considered an aggregator. A customer with multiple locations can aggregate all of their own loads. Individual customers can increase their market leverage by joining with other individuals to aggregate their total load.

To protect customers from unfair or abusive marketing practices, aggregators, brokers, marketers and other entities offering electric service to residential and small commercial customers must register with the CPUC. They must fill out a simple two-page registration form and pay a $100 registration fee. The CPUC will make information about how to register available by June 1, and post it on the CPUC Internet website at http://www.cpuc.ca.gov [see the category Electric Restructuring]. The CPUC will accept registration forms beginning July 1. The CPUC also will make registration information available to the public.

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Consumer Protections

Each entity offering electric service to residential and small commercial customers must provide those customers with a written notice explaining the price, terms, and conditions of service, the competitive transition charge and its amount, and the customer's right to rescind the contract. Companies may be required to display their CPUC registration number in advertising, including phone directory advertising,

and in other customer communications.

The Commission may revoke the registration number and bring civil or criminal action against any registrant who fails to abide by these and other market or consumer protection rules or laws.

Consumers who want to be served by an aggregator will have to authorize service in writing or electronically. Any change in service provider will have to be verified by an independent third party. Service providers will be responsible for ensuring third party verification is accurate and protects consumers. Additional consumer protection rules will be issued in the near future.

This Fall, a statewide, comprehensive consumer education program will be launched to ensure consumers know about how the new electric services market will work, and have the information they need to decide whether and how to participate.

Releasing Customer Information

With written approval from a customer, the customer's utility will release the customer's name, service and billing address, phone number if available, account number, and historical metered usage to: the customer, an agent acting on behalf of a customer, or all energy providers.

Independent System Operator (ISO) and Power Exchange (PX)

Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric will continue to own their transmission facilities but turn operation of them over to the Independent System Operator (ISO). The ISO is independent of utilities and will act as an air traffic controller for energy, making sure electricity is transmitted throughout the state reliably, safely, efficiently, and on a non-discriminatory basis. The ISO requires that all direct access arrangements be scheduled by a Schedule Coordinator (SC - a utility, aggregator, broker or marketer), and that the SC provide a balanced schedule to keep energy use at a relative constant over the 24-hour period to avoid power surges or outages.

Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric must sell all of their power to the Power Exchange (PX), and buy power from the PX to resell to their customers, during the four-year transition to a fully competitive market. They will pay a price determined by the PX based on market demand for power. This will assure fair competition between utilities and other electricity suppliers.