Electric service providers and community choice aggregators: financial security requirements.
By mandating a minimum financial security amount, SB 1287 seeks to protect consumers from absorbing costs related to reentry fees should their service provider become insolvent. This bill intends to improve the reliability of community choice aggregators and electric service providers by ensuring they have sufficient funds to handle their financial obligations, thus safeguarding customers' rights and financial interests. However, there are concerns about whether this requirement may pose barriers to smaller or new entrants into the market who may find it challenging to meet these financial criteria.
Senate Bill 1287, introduced by Senator Bradford, aims to strengthen the financial security requirements for electric service providers and community choice aggregators in California. The bill mandates that these entities must post a bond or demonstrate insurance worth at least $500,000 at the time of their registration. This requirement is designed to ensure they can cover the costs associated with reentry fees for customers who are involuntarily returned to service from an electrical corporation that serves as the provider of last resort. The commission will also update its financial security requirements to consider costs for a minimum of 12 months of incremental procurement incurred by the provider of last resort upon such involuntary returns.
Opposition may arise from stakeholders who argue that this financial burden could limit competition within the energy market, resulting in reduced options for consumers. Additionally, there may be concerns regarding the effectiveness of regulatory compliance, ensuring that the bond or insurance is sufficiently managed and enforced. The bill's requirement to remain compliant with increased security obligations may also engender debate regarding its implications on local public utilities and the extent of control exercised by the state over local service providers.