More California businesses will soon have an opportunity to save money on their electric bills by shopping for an alternative energy provider, thanks to legislation passed in the last session.

Since 2001, only a limited amount of California businesses and residents have had the ability to buy electricity from a competitive electric service company and save money on their power bill.  Due to the energy crisis, "direct access," or the ability to shop for your energy supplier, was suspended for new customers.  Customers who were buying electricity from a competitive supplier at that time were grandfathered, and have had the ability to shop for a lower electric rate since that time.  That has given some businesses a competitive advantage, because they could lower one of their largest costs, energy, by having different electric companies compete for their business.

More businesses will soon have this ability to lower their costs by shopping for their electricity supply thanks to SB 695, passed during the most recent legislative session.  The bill requires the California Public Utilities Commission (PUC) to expand the number of business customers who are eligible to shop for an alternative power provider, subject to a cap.  Under the new law, the PUC must phase-in new, higher caps on the number of customers who may shop for electricity, with the caps specific to each utility service territory.  The cap of kilowatt-hours served by competitive electric companies shall be equal to the maximum total kilowatt-hours supplied by competitive providers in a utility service area during any sequential 12-month period between April 1, 1998, and the effective date of SB 695.  The phase-in will occur over a period of three to five years. 

The PUC has not yet started a proceeding to implement the expanded electric choice for business customers.  However, if experience in other states in any indication, business customers will want to be ready to strike once the PUC sets out a process for new shoppers, to avoid being shut out of shopping for electricity due to the cap.  In Michigan, a 10% cap on electricity shopping was instituted in 2008.  At Consumers Energy, the cap was hit in just seven months, leaving all remaining customers paying higher utility electric rates, instead of shopping for a lower rate from a competing energy provider.  With California's high energy prices, businesses will have to act fast to ensure they don't get shut out of their opportunity to shop for a lower electric rate.