A summary of the California Public Utilities Commission`s two competing electric utility restructuring proposals

Abstract

In May 1995, the California Public Utilities Commission (CPUC) released two proposals for restructuring the state`s electric power industry. The two proposals follow more than a year of testimony and public comment after the CPUC issued the ``Blue Book`` (CPUC 1994a) on April 20, 1994, which called for retail wheeling to be phased in to all customers over 5 years. The majority proposal, supported by three of the four CPUC commissioners (one seat was vacant when the proposals were released), calls for creating a central pool, or ``poolco``; setting electric prices to reflect true costs of service, or ``real-time pricing``; and allowing parties to negotiate ``contracts for differences`` between the pool price and the contract price. The minority proposal, sponsored by Commissioner Jesse Knight, calls for retail wheeling, or ``direct access,`` and for utilities to divest or spin off their generating assets. This paper presents a summary of the major provisions of the two CPUC proposals and the possible implications and issues associated with each. It is aimed at researchers who may be aware that various efforts to restructure the electric power industry are under way and want to known more about California`s proposals, as well as those who want to known the implications of certain restructuring proposals for renewable energy technologies. Presented at the end of the paper is a summary of alternative proposals promoted by various stakeholder in response to the two CPUC proposals.