To: Consumer Protection and Education Subgroup Participants
From: Lon W. House, ACWA-USA JPA Advisor
Re: Public Entities as Energy Service Providers II.
Date: June 27, 1996

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The following are some additional comments/clarifications about the licensing requirements of public aggregators raised by Michael Shames in response to my June 24 memo. Michael's comments considered two cases. Case 1: Public entities servings as energy providers for their traditional constituency-need no CPUC registration /license. Case 2: Public entity serving as energy provider for a non traditional customer-concerns raised about the responsiveness of the public agency to the new customer and the protection of that customer.

I do not share Michael's concerns in case 2, for the following reasons.

1) Customer Redress - I would disagree that public entities may not be any more responsive than private corporations. In contrast to private concerns, public's have publicly noticed, open meetings that anyone can speak at. All public entities in California fall under the Brown Act, which states; "All meetings of the legislative body of a local agency shall be open and public, and all persons shall be permitted to attend any meeting...". Any person, old customer or new customer, that has an opinion about virtually anything simply has to call and get put on the agenda, or show up at the meeting and speak during the public comment period. In general, thirty days is the maximum that a customer can go without getting his/her concern voiced in a public meeting of the decision-making board of that agency. You do not have that level of redress with a private entity.

2) Information about decisionmakers - All directors of local agencies are public officials, elected and serving under the same rules as any elected official. Any person that has a decision making ability with a public entity in California has to comply with conflict of interest laws. (This doesn't apply to only directors, I had to file a complete Form 730 [Statement of Economic Interest] as the advisor to the ACWA-USA JPA.) All of this is public information. Anyone with any concerns about any of the people making decisions for them simply has to go to the public record to find out who they are, what they own, what their investments are, where their income comes from, even who has given them gifts worth more than $50.00.All this information is updated on an annual basis. You have no such information about private corporation officers.

3) Decision making process- It is virtually impossible for the public agencies to make "back room deals". All decisions by public bodies in the State have to be made in public meetings, properly noticed, with that specific decision on the agenda posted 14 days prior to the meeting date. As stated, anyone can attend that meeting, listen to the discussion, comment, and watch the decision being made. You do not have that level of openness with private companies.

4) Financial Viability/ Accountability- Public entities in California generally have to produce, at a minimum, an annual audited financial report. This annual report is like everything else associated with public entities, a public document that anyone can get and read. Bonding requirements, credit rating, debt insurance, all are governed by public code and requirements. While all of these protections may not prevent every negative economic event, when is the last time that you know of a public agency in California that ceased operation and left its customers stranded?

In conclusion, everything (and more) that you are desiring for the CPUC registration of energy service providers is currently being produced and is a matter of public record for the public agencies in the state. Furthermore, it is available on a local level, not at some central repository in San Francisco. While I have reservations about the legality of requiring public agencies to come under CPUC approval/review, I think it is unnecessary and redundant.

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