3. Overview

The electricity market crisis of 2000-2001 shifted the paradigm from the competitive process envisioned under the 1996 electricity restructuring system to a hybrid market that includes both regulated IOUs, as well as independent power producers (IPP). The Commission has signaled in numerous decisions its commitment to pursue policies and goals that promote competition and customer choice, while maintaining a viable and workable electricity generation sector that assures reliable service at just and reasonable rates for bundled utility customers.

Maintaining a balance among the interests of the bundled ratepayers, the ratepayer funded IOUs, and the competitive market participants continues to be a challenging endeavor. We recently effectuated the appropriate balance in the most recent LTPP decision (D.07-12-052).

Not all parties agree with our outcomes, and many of the PFMs involve issues that are particularly germane to the hybrid market. In particular, some PFMs addressed how to ensure competitive solicitations, others focused on whether IOUs can submit utility-built projects into the solicitations and if so, how are they compared with those from IPPs, and other PFMs questioned whether and how the IOUs should propose resources identified outside of a competitive solicitation. This decision resolves all of the PFMs received to date for D.07-12-052. We believe that these modifications represent the best approach to resolving - in this same spirit of striking a fair balance amongst stakeholders in the hybrid market environment - the concerns raised.