Regulatory Framework for Electronic Service Providers


Determine the regulatory framework in the current market with regard to starting an independent ESP energy reselling company. The information will be used to understand the regulatory gaps when establishing such company.

Early Findings

California Public Utility Commission's ESP Framework

  • CPUC's public utilities code section 394a states that an electric service provider (ESP) is considered as a non-utility company that can provide electric services to consumers.
  • However, this can only be done within the service area of an electric utility.
  • CPUC's subparagraph (b) also mandates ESP to register with the commission and follow its policies.
  • CPUC's ESP registration framework applies to those entities that are providing services to homes and small businesses that have have less than 20 kW power needs.
  • These constraints were also deemed applicable to those ESPs that were not required to register before.
  • For new ESPs, the commission requires them to submit "resource adequacy requirements and renewable portfolio standards requirements."
  • Entities who wish to become ESPs must have a UDC-ESP service agreement with each utility distribution firms that are operating within the service location of the company.
  • Upcoming ESPs should also provide a minimum security deposit amounting to $25,000 in cashier's checks or financial guarantee bonds with the CPUC.
  • Furthermore, upcoming ESPs should establish an agreement with a scheduling coordinator (SC) that is empowered by the Independent System Operator (ISO) before providing services to their customers.
  • They should also provide a copy of "Section 394.5 Notice to the Energy Division of the CPUC" before providing their services to their customers.
In addition to this public search, we scanned our proprietary research database of over 1 million sources and were unable to find any specific research reports that address your goals.

Proposed next steps:

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Our initial research provided some insights on the regulations and constraints that were put in place by the CPUC when it comes to being an ESP. Given that there are available resources on this, we propose continuing the research to provide 5-7 insights on the regulatory framework of the California Public Utility Commission ( Legal Code: Public Utilities Code Section 394a) with regard to being an independent electric service provider (ESP). As an ESP, the provider will buy energy from Pacific Gas & Electric (PG&E) when the rates are low, store the energy in localized grid solutions, and sell it back to the customers when energy rates rise. We will include information on the the regulatory gaps, whether this setup is possible, and operations constraints. We will look at the site of Pacific Gas & Electric (, the largest energy provider of the Bay Area and other related sources for this. We will also provide 5-7 insights on the operations of the Alameda Municipal Power (, an ESP, to understand why they exist vs PG&E not serving the area as a vendor.
We also recommend undertaking additional research to provide 5-7 insights on the secondary effects of creating an accelerated bank run on PG&E if people purchase power at a cheaper rate and or remove themselves from the grid.