What Is Third Party Electric on My PGE Bill?

When reviewing your Pacific Gas and Electric (PGE) bill, a “third-party electric” charge indicates your electricity supply comes from an entity other than PGE, even though PGE delivers it. This arrangement is common in regions with electricity deregulation or customer choice. This article clarifies these charges and their function on your PGE bill.

Understanding Third-Party Electric Providers

Third-party electric providers play a distinct role in the electricity market, primarily focusing on the procurement and generation of electricity rather than its delivery. In PGE’s service territory, two main types of these providers commonly serve customers: Community Choice Aggregators (CCAs) and Direct Access (DA) providers. These entities offer alternatives to receiving electricity generation directly from the incumbent utility.

Community Choice Aggregators are local governmental entities, such as cities or counties, that procure and supply electricity to residents and businesses within their jurisdictions. These programs allow communities more control over their energy supply, often focusing on increasing renewable sources. CCAs operate as non-profit public agencies, and their service areas continue to expand across California.

Direct Access providers, also known as Electric Service Providers (ESPs), are competitive energy companies that large commercial and industrial customers can contract with directly for electricity supply. This option allows eligible businesses to choose their electricity generator from a competitive market. However, Direct Access service is not generally available to residential customers in California.

How Electricity Billing Works with Third Parties

Understanding how electricity billing functions with third-party providers involves recognizing the “split bill” concept, where responsibilities are divided between the third-party provider and PGE. PGE maintains its role in delivering electricity and managing customer services, even when another entity supplies the power. This structure ensures a seamless experience for the customer, who continues to receive a single, consolidated bill from PGE.

PGE remains responsible for delivering electricity through its network of transmission and distribution lines, poles, and transformers. PGE also handles services like meter reading, billing, customer support for delivery issues, and maintenance and outage response. Essentially, PGE acts as the conduit, ensuring the electricity generated by the third party reaches the customer’s premises.

The third-party provider (CCA or DA) is responsible for electricity generation and procurement. They acquire power from various sources, which then flows through PGE’s infrastructure. Your monthly bill will show charges from PGE for delivery and other services, and from the third-party provider for the electricity supply. PGE collects these third-party charges on behalf of the generation provider, streamlining payment.

Components of Your Bill with a Third-Party Provider

When a third-party provider supplies your electricity, your PGE bill itemizes charges from both entities, reflecting their distinct roles. These charges cover all aspects of electricity service, from generation to delivery and mandated programs.

Third-party provider charges primarily include the “Generation” or “Electric Generation” charge. This covers the direct cost of electricity consumed, reflecting the price the CCA or DA provider pays to acquire power. This charge replaces the generation component PGE would typically assess if they were your full-service provider. While the third-party generation charge appears on your bill, PGE provides a corresponding credit for its own generation charges, ensuring you are not double-billed.

“Delivery Charges” cover costs associated with transmitting and distributing electricity through PGE’s grid, including operating and maintaining infrastructure like power lines and poles. These charges also support safety and reliability investments.

Another component is the “Public Purpose Programs (PPP) Surcharge.” This charge funds state-mandated initiatives benefiting all Californians, such as energy efficiency programs, low-income assistance, and renewable energy development. These programs address broader societal and environmental energy goals.

A charge for customers with third-party providers is the “Power Charge Indifference Adjustment (PCIA).” This charge ensures customers transitioning from PGE’s generation service to a third-party provider still contribute their fair share to the costs of long-term power contracts and generation assets PGE secured before they switched. The PCIA acts as a “true-up” mechanism, preventing remaining PGE customers from bearing costs of these legacy commitments. The PCIA rate can vary annually and depends on the “vintage year”—the year a customer switched to an alternative service.

The “Franchise Fee Surcharge” is included on your bill. This fee is collected by PGE on behalf of cities and counties for the right to use public streets and lands for utility services. PGE collects and remits this surcharge to local governments. For customers receiving electricity from a third-party provider, this surcharge is listed as a separate line item.

Customer Choices and Enrollment

Customers have options regarding their electricity generation provider, even when a third-party electric charge appears on their PGE bill. The process for enrollment and switching providers is governed by state regulations.

Many Community Choice Aggregation (CCA) programs operate on an opt-out basis. This means customers residing within a CCA’s service territory are automatically enrolled in the CCA’s electricity generation service unless they choose to opt out. Customers receive multiple notices from the CCA prior to and after enrollment, providing information on their service and how to opt out.

If a customer prefers to receive electricity generation directly from PGE, they can opt out of their CCA program. The process involves contacting the CCA directly to submit an opt-out request. A grace period, often the first 60 days of service, allows opting out without a fee. After this period, a small administrative fee may apply. Opting out takes effect at the end of the customer’s current billing cycle, meaning some CCA charges may still appear on a final bill.

Customers can also opt back into a CCA program if they previously opted out. For eligible large commercial and industrial customers, the Direct Access (DA) option allows them to contract with an Electric Service Provider. Residential customers are not currently eligible for new Direct Access enrollment. Regardless of the chosen generation provider, PGE handles electricity delivery and consolidated billing.