Fortnightly Magazine - January 1 1995

California Rides the Tiger

Revolutions rarely succeed without a struggle. At the California Public Utilities Commission (CPUC), the move to restructure the state's electric utility industry is no exception. The stakes are enormous. For starters, annual revenues at the state's investor-owned electric utilities (IOUs) exceed $18 billion, making up

2 percent of California's gross state product. Competitively priced electricity is vital to California's $800-billion-a-year economy, one would think.

PoolCo vs. Bilateral Markets?

Vikram S. Budhraja

Vice President of Planning and Technology

Southern California Edison Co.

The transition to a competitive generation marketplace is underway. Customers want choices, flexibility, and competitive prices. Producers want open nondiscriminatory access to markets. Regulators want a smooth transition to the new system based on competitive efficiency, not cost-avoidance or cost-shifting among customer groups. And policymakers want a system that protects consumers without sacrificing environmental and energy policy objectives.

To Pool or Not to Pool: A Distracting Debate

The debate over the merits of pool-based markets as opposed to reliance on bilateral transactions and the invisible hand of competition began without much care taken to define the details of the bilateral alternative. On closer examination, however, we find the two approaches have much in common, being more like different pews than different churches. A further debate that emphasizes only the few differences would not inform so much as distract from solving the common problems.

Financial News

Retail wheeling has been repeatedly condemned by opponents who claim that it would cause rate discrimination between customer classes. They allege that it would unfairly reduce rates for large customers, while raising them for small ones. But discriminatory rate structures already result from the selective discounts that utilities grant their large customers.

1994--The Year in Review

We begin the new year with a recap of the major rulings issued last year by state public utility commissions (PUCs).

Electricity took center stage as state commissioners began in earnest to examine rising competition in the power generation market. The seemingly endless number of privately sponsored seminars, conferences, and reports on the issue might suggest that regulators are following rather than leading on policy.