California’s Direct Access System

11 Feb 2022

Market Insights :: Research Notes :: United States

Utilizing California's Direct Access system and purchasing energy from Electric Service Providers (ESPs) can provide more stable pricing through long-term fixed contracts, which provide the customer greater visibility of its future electricity costs.

In any deregulated state, Electric Service Providers (ESPs) offer competition to the investor-owned utilities (IOU), which provide electricity to customers in that state.

This structure gives customers options when choosing where to purchase electricity, and in California, a deregulated state where electric price volatility is a major issue, an ESP often provides a better price than the utility. Additionally, ESPs can provide more stable pricing through long-term fixed contracts, which provide the customer greater visibility of its future electricity costs.

Once a customer decides it wants to explore an ESP as their electricity supplier, it will need to apply to the California Direct Access (DA) program. However, California has a limited amount of load available for Direct Access between the three major utilities in the state – Southern California Edison (SCE), Pacific Gas and Electric (PG&E), and San Diego Gas and Electric (SDG&E). With demand for DA being so high, California implemented a lottery process for deciding which accounts are approved for DA each year.

The Direct Access Lottery Application

During the second full business week of every June, the lottery process opens for applicants seeking DA service for the following year.

The first step is submitting a Six-Month Notice to Transfer to Direct Access form to the IOU for each service account number that you want to switch to DA, accompanied by that utility's corresponding Customer Information Service Request form.

The customer will then receive an email saying that the utility received its entry within 30 minutes of submission. This email does not indicate the utility accepted the submission, just that the utility received the form. If the confirmation email is not sent, the customer should contact the utility.

Applying for the lottery process poses no risk for the customer as there is no obligation to accept the DA service even if chosen in the lottery.

Possible Lottery Results

Once the utility accepts the customer's application, it will be put into the DA lottery, where all applications will be randomly assigned a waitlist number. There are a few different potential outcomes after a customer is entered into the DA lottery.

The Customer is Initially Accepted into the Direct Access Program. If its waitlist number is chosen, the customer will be informed in August and has 15 business days to accept or decline the opportunity. If a customer declines to go on Direct Access at that time, the customer's account will continue receiving their electricity supply from the utility.
The Customer is Initially Waitlisted but Later Chosen as Additional Load becomes Available. If no load is available or the customer's number is not chosen, the customer will be notified that it has been placed on the waitlist for that year. At a later date, if the customer's waitlist number comes up and there is load available, it will be offered the opportunity to switch to DA. The process of choosing which accounts occupy the top waitlist spots can vary by utility each year.
The Customer is Never Chosen for Direct Access Service that Year. If a customer is not chosen, it is required to submit another application for the lottery next June, following the same process. Nothing a customer did in the prior year affects its standing in the lottery the following year. Every year is a complete reset.

Next Steps after Being Chosen for DA

A time-sensitive process begins when a customer is chosen to receive DA service, whether from the initial selection or through the waitlist.

As stated above, the first period is a 15-day period to accept or decline the service. Assuming the customer accepts, it then has 45-days to find an ESP, have the ESP complete a Direct Access Service Request (DASR) form, and return the form to the utility.

After accepting DA service, completing the DASR process within the given time frame is essential - penalties are applied to those accounts that do not complete it promptly. If the DASR process is not completed within 45 days, the utility will move the account to its temporary rate called Transitional Bundled Service (TBS) and allow another 60 days to provide the utility with the DASR. If the DASR has still not been submitted to the utility after that 60-day window, the service account will not be allowed to apply again for the DA lottery for 18 months.

If the DASR process is completed on time and accepted by the utility, the account will begin DA when load is available, which is specified by the utility in its notification to the customer of acceptance into the DA program.

Customers do have the option to leave the DA Program and return to the utility's Bundled Portfolio Service (BPS), which is the term for the utility's full-service tariff electricity supply program. To do so, a customer will have to complete a Notice to Return form and commit to BPS for 18 months.

Entering the DA Lottery an Essential Step to Securing Best Price in CA

Having more than one supplier to purchase electricity from gives customers the ability to negotiate prices and choose the option that works best for them. Signing up for the Direct Access Lottery is the first step and comes with no risk to the customer. It allows customers more time to consider their options when comparing prices and ultimately gives them the opportunity to switch their electric provider if they choose - an option they would not have had if they did not apply for the lottery.

How NUS Can Help

NUS has helped multiple businesses enter into the DA Lottery and navigate the deregulated market. NUS prepares and delivers the Six-Month Notice forms to the appropriate utility or utilities. If a business is selected for DA and accepts, NUS will reach out to ESPs on behalf of the business for DA pricing on the electricity service of the accepted accounts. Once it chooses a DA supplier, NUS will organize the signing of the supply contract with the ESP and continue to follow up on the status of the DASR process.

Please contact us for more information and to get started saving on energy costs.

More: Research Notes, California Direct Access Program, Electricity, Electricity Service Providers (ESPs), California