A FREQUENTLY ASKED QUESTION UNDER CALIFORNIA's NEW electricity framework is, "Where have all the suppliers gone?" At a recent industry symposium, one large customer noted during negotiations with competitive energy suppliers that all five finalists had disappeared. The experience at my firm has been so draconian, but I have found that it is not unusual for half of the finalists to disappear in the bargaining. And when I say "disappear," I'm talking about something more extreme than simply reaching an irreconcilable difference. I'm talking about a telephone call bluntly informing the customer that the seller is leaving the bidding unilaterally.
What explains this peculiar behavior? A careful review shows that the California Public Utilities Commission, guided by the torturous language of Assembly Bill 1890, the state's electric restructuring law, has created a situation where customers are not necessarily a part of a competitive market. While that may sound peculiar, not to say counter-productive, it simply reflects the PUC's preoccupation with theoretical market issues and its lack of interest in short-term customer welfare. As the PUC has stated many times, its major interest was in achieving a transparent pricing and market structure. It may well have succeeded but at the cost of giving up market access for the customers themselves.