The California Memorandum of Understanding (MOU) is an agreement between Southern California Edison Co. (SCE), the California Manufacturers' Association, the California Large Energy Consumers' Association, and the Independent Energy Producers. It tackles three major issues:s recovery of stranded assets
s market power
s market structure.
If the MOU is eventually endorsed, it might be a landmark in electric restructuring \(em and not only in California. But there would still be a long way to go.
Stranded Assets
By far the most significant item on the agenda of California's investor-owned utilities (IOUs) is the recovery of potentially stranded assets: nuclear power that is not too cheap to meter, expensive contracts with qualifying facilities (QFs) under the Public Utility Regulatory Policies Act (PURPA), and other costs (such as nuclear decommissioning). In the MOU "the parties agree in principle that, as the industry makes the transition to a new competitive market structure, SCE should fully recover its prudently incurred past investments and obligations made to fulfill its historical obligation to serve." This proposition should warm the cockles of IOU management and shareholders throughout the nation.