As we've noted the past two weeks, soon a lot more California businesses will be able to choose their electricity company under a process known as "direct access," which allows new energy providers to compete for customers' business.  That competition drives down power prices, and can save California businesses thousands of dollars, if not millions, on their energy costs.

In fact, many California businesses are already enjoying the savings possible from shopping for electricity, under a policy that grandfathered them and has allowed them to choose a competing energy company since the late 1990s, while other customers have been denied this right during a suspension of direct access.

Take, for example, the California State University (CSU) system.  Len Pettis, Chief of Plant Energy and Utilities for California State University, has said that, "[d]irect access has afforded CSU a portfolio of energy supply options and cost certainty not available from the utilities."

In fact, CSU has saved over $30 million from shopping for electricity for nearly a decade -- savings that have been used to help meet enrollment targets, save jobs, and reinvest in energy efficiency measures on campuses.

Bill Dombrowski, President of the California Retailers’ Association, added that, "California’s retail business owners overwhelmingly support a return to customer choice as a means to energy management."

"Choice, or direct access as it is referred to, provides innovation and management opportunities that will translate into lower costs for goods,” Dombrowski explained, pointing to a problem under the current suspension of direct access.

“The problem today is that some retailers have it, but because of the suspension, others who want to exercise choice can’t have access to the same benefits.  Allowing all retailers to have the same low cost electricity options is a matter of commercial fairness,” Dombrowski noted.

Unfortunately, the bill expanding direct access (SB 695) does not extend the ability to shop for a lower electric rate to all non-residential customers, and only expands the amount of customers eligible to shop subject to a cap.  That makes it crucial for California businesses to be ready to shop for a new electric service provider in about March or April, when the California Public Utilities Commission will likely take the first step in allowing new customers to shop for electricity.  Be sure to monitor the re-opening of direct access and find the right supplier in order to switch to a lower electric rate immediately when the cap opens.

Still, even though it is limited, "[t]he passage of SB 695 enables California businesses to gain greater control over one of our largest costs – energy – allowing us to place greater focus on building our businesses and creating more California-based jobs,” said Glenn Barrett of SUPERVALU, Inc.