Published May 26, 2010

The California Public Utilities Commission has issued a decision that takes direct aim at allegations of "untrue or misleading" commercial speech by utilities regarding community choice aggregation programs.

Community choice aggregation is an energy-supply approach in which political jurisdictions such as cities or counties "aggregate" a group of customers to buy electricity from a different supplier than the one already serving their area, typically a private utility.

The primary goal of such programs is often to significantly increase the percentage of renewable electricity that is supplied to consumers.

In the San Francisco area, where community choice programs have been initiated by local jurisdictions, marketing by the utility Pacific Gas & Electric Co. has drawn complaints. The city and county of San Francisco filed petitions with the utilities commission seeking to restrict utilities from marketing against CCA programs.

Marin County and seven cities and towns in the county north of San Francisco, which have established a community choice aggregator called the Marin Energy Authority, also have complained about the company's methods.

The Public Utilities Commission, which oversees the state's three large investor-owned utilities — PG&E, Southern California Edison and San Diego Gas & Electric — has issued a decision in response to the city and county of San Francisco's petition.

The commission said its decision is "to make clear that, if utilities engage in commercial speech concerning CCA service and the utility’s competing service that is untrue or misleading, they may be liable for penalties and subject to a temporary restraining order or preliminary injunction in a complaint before the Commission."

The commission also said it would prohibit utilities from offering alternative "opt-out" mechanisms than are identified under an existing resolution. When a CCA is formed, electricity customers must "opt out" by specified means to continue to receive service from the utility company.

According to the commission, the petition by the city and county of San Francisco said that "in slide presentations to the City of Mill Valley and the Town of Tiburon in October 2009, PG&E stated that the Marin Energy Authority (MEA) program contained 'hidden costs,' 'hidden greenhouse gas compliance costs,' 'hidden joint and several liability' and a 'hidden tax on Marin taxpayers' – even though the MEA had not yet determined the rates, terms and conditions of service for customers."

The city and county also complained: "A mailer to San Francisco and Marin customers prepared by, respectively, CommonSenseSF and Common Sense Marin, the only identified member of which is PG&E, warns 'don’t be left in the dark,' describes the CCA program as a 'risky scheme' that was '[c]reated by Sacramento legislation' that 'automatically enrolls you – whether you like it or not – unless you opt out' at the cost of 'unspecified ‘exit fees,’ and as a 'costly and unnecessary energy scheme' with bills '24% higher under CCA' than from the utility."

Pacific Gas & Electric Co. has become a focus of controversy by financially supporting a California ballot measure that would require a two-thirds vote by counties or communities to adopt community choice aggregation programs.

The utility, on its website, advises customers considering community choice aggregation: "One of the primary impacts is what you may be charged for electricity. The California Public Utilities Commission – the primary state agency that regulates PG&E – does not control CCA program rates, does not oversee CCA program reliability and will not act to resolve complaints by customers against CCA programs. CCA programs may incur higher or lower levels of costs in providing power than PG&E. The result may be an increase or decrease in a customer’s overall electricity bill. Customers may also receive a 'less clean' or 'cleaner' supply of power than provided by PG&E."

Commissioner Timothy A. Simon filed a dissent from the commission's 4-1 decision. He said in the filing that although he supports community choice aggregation: "It is my belief that the governmental interests in encouraging the development of CCA programs and allowing customer choice to participate in them could be better served by a more limited and balanced bilateral restriction on commercial speech than the one adopted by the Proposed Decision."

"Excessive unilateral restrictions on commercial speech may not pass the constitutional muster," he said, adding in his opinion, "We should handle these constitutional issues with care and avoid overly restrictive rules that may have a chilling effect on speech."

Commissioner John A. Bohn, who filed a concurrence with the decision, said, "We need to be careful that in our oversight of commercial speech, that we do not constrain free speech or even chill speech.  It is our responsibility to ensure that utilities do not make misleading statements.  That does not give us the right to dictate what speech is permissible.  Utilities have the right, and some would argue the duty, to make their case to customers.  We should not simply assume that any commentary on their part is misrepresentation, or that every claim by a proponent of a CCA is accurate and balanced.  Where a proponent of a CCA is making inaccurate statements, the utility has an affirmative obligation to respond if it sees a problem."

"I support this decision, and believe that the restrictions we adopt at this time are reasonable and should provide CCA proponents with a fair opportunity to compete for customers, without unduly restricting the reasonable activities of utilities.  However, I am troubled by one aspect of this decision.  I think we must be careful that in our efforts to ensure a fair opportunity for CCAs, we do not inadvertently tip the playing field.  While we have in this decision clarified that the Commission will use its regulatory authority to oversee utility commercial speech regarding CCAs, we have not applied the same regulatory oversight to the actions of CCAs."

Mr. Bohn added in his concurrence filing: "I believe that we must apply our regulatory oversight in an evenhanded manner, and provide basic consumer protections against inappropriate speech by any party."