Nearly three years on from the Yellow Book,1 after many long hours and thousands (em if not millions (em of pages, and following much bitter debate (linked with some murky politics), the California Public Utility Commission (CPUC) by a 3-2 majority has at last published an Order2 to introduce competition for retail customers.
The decision contains four main proposals:
s market structure
s access for customers
s stranded assets
s public policy
Market Structure
The Order follows the broad principles of the September Memorandum of Understanding (MOU)3 agreed between Southern California Edison (SCE), and representatives of power marketers, independent power producers (IPPs), and large customers. The Order requires the creation of an Independent System Operator (ISO) and a separate Power Exchange (Exchange) that will coexist with physical bilateral trades (the so-called flexible pool). The Order also addresses the issue of market power, which has bedeviled the market in England & Wales, where two generators control the margin (em hence prices (em most of the time, a result that has created considerable distortions and problems.
The ISO
The ISO's responsibilities will be to ensure reliability and efficient operation of transmission, and