How to improve the CPUC

Borrow from the CEC

The CPUC is doing a very poor job representing the interests of the California electrical customers. Below I briefly comment on 3 decisions I disagree with:

Examples of Poor CPUC Decisions

1. NEM 3.0

Setting aside the flaws in using the Avoided Cost Calculator to measure the true value of solar (see this report), it does not make sense for the CPUC to not provide a glide path for the changes in the regulation. The Solar Installer market in 2024 is not capable of installing batteries (skills and even licenses), the permit processes at most jurisdictions are not able to handle batteries (particularly the Fire department regulations), the commercial products are not yet ready (LFP batteries are just starting to show up), and there are much better products in the pipeline. The result is that most small Solar Installers are failing, and that customers with limited resources cannot afford to install solar.

The CPUC behaved as it didn’t understand the market. Anybody that stays attuned to the properties of the market would have required a substantial glide path in the transition from NEM 2.0 to NBT.

2. VNEM/NEMA

The IOUs argued that it was too complicated to support multiple meters. The CPUC accepted this. This is ridiculous. With smart meters, computing this is an easy engineering problem, and the setup works in many states. Any engineer would have asked the IOUs the hard questions.

The CPUC does not have the engineering skills to challenge statements from the IOUs.

3. Income-Based Fixed Charge

Assume the spreadsheets shared by the IOUs correctly capture the benefits of IBFC (ha!). The problem is that people are not spreadsheets. You cannot just assume that people will look at the data and will do what the data shows. Anybody trying to sell a product knows this: humans are not spreadsheets.

The CPUC does not have the product marketing skills to understand how customers react.

The Root Problem?

The composition of the CPUC has two big problems. One is that the commissioners are mostly composed of lawyers. I don’t have anything against lawyers but the problems that the CPUC is facing are complicated. The demands are chaging very fast, the technology is changing, and so is the market. What worked for multiple decades no longer works today. And the change will continue to accelerate. The CPUC needs multiple skills, not just those from law.

The California Energy Commission (CEC) is doing a much better job than the CPUC. I believe a key reason is the composition of the CEC. From their Website:

The Governor appoints, with Senate confirmation, five commissioners to staggered five-year terms. The commissioners must come from and represent specific areas of expertise: law, environment, economics, science/engineering, and the public at large.

The CPUC should have a similar composition. This would bring in the skills needed to tackle our problems.

A second big problem is that the CPUC is too close to the entities it regulates. The above area requirement used at the CEC would also address this. Some regulation like AB-2054 is also a good idea, although not the watered down version that passed Assembly but the previous version - see the differences HERE.

How to Change the CPUC Composition

Unfortunately the process that describes how the CPUC Commissioners are selected is part of the California Constitution and it cannot be changed by a simple legislature bill. The “simplest” way to change this would be through a Ballot Initiative to amend the Constitution. Not for the faint of heart, but perhaps the cumulative impact of CPUC decisions will make it happen at some point.

Or… our Governors could make a commitment to appoint a good set of commissioners. Stranger things have happened.