Press Release

Governor Signs Hertzberg Bill to Expand Options for Meeting Renewable Energy Goals

SB 237 will lift cap on Direct Access, giving commercial and industrial customers more choice in their electricity service

September 21, 2018

SACRAMENTO – Senator Bob Hertzberg (D-Van Nuys) announced that Governor Jerry Brown signed his bill SB 237 yesterday. SB 237 will lift the cap on direct access (DA), which allows non-residential customers to choose electricity service separate from their local utility.

“This law empowers California businesses to make cost-effective energy decisions while also meeting the state’s renewable energy and greenhouse gas goals,” said Senator Hertzberg. “It creates just a small amount of breathing room so that schools, businesses, and hospitals have greater control and flexibility over how they purchase their electricity.”

Although California has DA service already, it has been capped since 2011 at about 25,000 GWh/yr; around 12% of statewide usage. However, since the current DA market was opened, requests for DA service outpace availability and any openings are filled in a matter of seconds.

SB 237, which will lift the cap on new DA transactions by 4,000 GWh, reflects a growing shift in how energy is purchased in California.

“There is clear interest in expanding the range of options for customers to choose their energy,” said Michael Picker, President of the California Public Utilities Commission. “This is a responsible step in that direction.”

As the state’s clean-energy economy evolves, customers are learning to connect with and obtain the power mix they want directly. Entities like the UC and CSU systems, hospitals, grocery stores, and many others have developed expertise in sustainability and set aggressive corporate sustainability goals.

These entities often choose DA because it lets them find specialized energy services and products they need to meet their targets. For example, the University of California became a DA customer in order to help the 10-campus system meet its 2025 goal for reaching carbon neutrality.

“We are grateful for the opportunity for our public schools and colleges to get the best pricing and terms for electricity,” said Michael Rochman, Managing Director for School Project for Utility Rate Reduction. “We can apply the benefits and savings to our primary mission, education of our students.”

DA providers are prohibited from shifting costs to residential consumers and are also required by law to meet all greenhouse gas and renewable energy goals set forward by the state.

Further, the signing was applauded by both the manufacturing and high tech industries in California:

“This bill exemplifies the need for consumer choice in order to spur innovation to fuel the state’s economy,” said Andrea Deveau, on behalf of TechNet.

Michael Shaw, Vice President of Government Relations at CMTA, added, “SB 237 allows manufacturers to meet California’s aggressive energy goals in an affordable manner while protecting manufacturing investments, creating good-paying middle-class jobs and benefiting consumers.”

Media Contact: Katie Hanzlik
Press Secretary
Senator Robert M. Hertzberg
Capitol Building, Room 4038
(916) 651-4018