A recent report commissioned by the California Hispanic Chambers of Commerce (CHCC) revealed that California’s Community Choice Aggregators (CCAs) are woefully behind in contracting with the state’s various small businesses. Community Choice Aggregators are a much newer set of energy agencies regulated by the California Public Utility Commission (CPUC). The report called “Failure to Diversify” found that CCAs contracted with diverse companies for less than 0.1% of purchases, causing women, minorities, disabled veterans and LGBT businesses to lose $1.2 billion in economic opportunities compared to energy companies owned by investors.
“California is home to the nation’s largest and fastest-growing segment of diverse small businesses,” said Julian Canete, CHCC president and CEO. “We are deeply concerned about the lack of progress in procurement opportunities for those small businesses as set forth and required by General Order 156 passed by the CPUC. Despite being a critical part of the economic recovery after the California pandemic, small and diverse-owned businesses have lost $1.2 billion in contract opportunities, a situation that is unacceptable and must now be remedied.”
Passed and passed in 2002, Assembly Bill authorized 117 cities and counties to establish their own agencies to purchase electricity for individual customers within their own jurisdictions. These agencies, called Community Choice Aggregators, compensate regulated utilities for the cost of electricity transmission and distribution to CCA customers. California’s first CCA, Marin Clean Energy, was launched in 2010, and today there are 14 different CCAs in the state that are registered with the California Public Utilities Commission (CPUC).
“For more than three decades, General Order 156 has proven that when women, minorities and other diverse businesses finally get the chance to compete, they often beat their competition,” said Senator Steven Bradford (D-Gardena), state author. . of several measures to expand supplier diversity requirements. “But it’s clear that CCAs need to do more with diverse sourcing if they want the moral and economic leadership positions they want. Their lack of meaningful miscellaneous spending shows that they are not creating real jobs or contract opportunities. The only diversity they seem to represent is in the communities they claim to serve but actually benefit from. Much more needs to be done and I appreciate this report drawing attention to the need to increase GO 156 purchases across all providers, especially from CCAs.”
In 1988, the California Public Utilities Commission (CPUC) passed General Order 156 in response to calls from policymakers and the public to increase the opportunities for various small businesses to contract with companies regulated by the CPUC. General Order 156 requires power, water, and telecommunications companies overseen by the CPUC to provide an annual report of their percentages of contracts given to women, minorities, disabled veteran, and LGBT companies, collectively referred to as “WMDVLGBTBE Companies.” “.
Recognizing that promoting the interests of diverse companies strengthens the overall state economy, GO 156 sets Section 8 procurement targets for regulated utilities, requiring companies to plan to purchase at least 21.5% of each major category of products and services from various third-party suppliers. purchase, including 15% for minority-owned businesses, 5% for women-owned businesses, 1.5% for businesses owned by veterans with disabilities, and targets to be set for businesses owned of LGBT. In 2020, the state’s four major regulated energy companies signed contracts with WMDVLGBTE companies for 39% ($8 billion) of a total of $20.6 billion worth of products and services.
“CCAs have been around for nearly 20 years, so it was shocking to see supplier diversity outcomes so low,” said José Atilio Hernández, president of IdeateLABS, a state-wide policy think tank that released the report on behalf of the Hispanic Chambers. about the Failure to Diversify report. . “As of 2020, California law requires CCAs to take a first step toward meeting CPUC requirements to contract with various companies by requiring results reporting. Now that we see the numbers, it’s clear that additional action is needed for CCAs to make meaningful progress in meeting the state’s equity contracting goals.”
Following the expansion in 2019 of G0 156 reporting requirements to CCAs through Senate Act 255, CCAs submitted their first supplier diversity procurement reports in 2021. The result was a dismal less than 0.1% of purchases, giving WMDVLGBTE companies markedly less $1.2 billion in economic opportunities compared to investor-owned energy companies.
The CHCC requires the CCAs to immediately rectify this dire situation and recommends the following steps for regulators and policymakers to consider if CCAs are to meet the CPUC’s 21.5% diverse contract target or match the 40% average seen by CPUC -regulated energy owned by investors Tools:
- Requires GO 156 Contracting Goals for CCAs. The legislator stopped requiring the same 21.5% diverse contract target as contained in GO 156 for CCAs. As a result, CCAs more than met that contract target, purchasing less than 0.1% of total procurement through WMDVLGBTE companies. CCAs should therefore be included in GO 156.
- Public Hearing on the Diversity of CCA Suppliers. These findings regarding supplier diversity results in 2020 should be subject to a CPUC hearing to provide feedback and guidance on how to help CCAs meet the diverse contract objectives of JU 156, especially as the legislator and
- The Commission is considering our recommendation to include CCAs in JU 156.
- A moratorium on new CCAs. Until CCAs are formally included in the GO 156 Supplier Diversity Program, we recommend a moratorium on creating new CCAs. These agencies are conducting cutting-edge policy conversations about the need to accelerate progress towards our renewable energy and climate change goals. But these efforts should not come at the expense of the state’s diverse small businesses, which we see missing out on billions of dollars as CCAs take on more procurement responsibilities in the energy supply chain.
News release from the California Hispanic Chambers of Commerce