Alliance for Retail Energy Markets (AReM)

AReM's primary concern in the LTPP proceeding is that the Commission does not take any action that compromises the ability to transition to a robust and competitive wholesale and retail market, such as promoting increased use of the Cost Allocation Mechanism (CAM) established in D.06-07-029 or allowing continued stranded cost recovery (D.04-12-048). AReM notes that the balance in the hybrid market that exists now in California is in danger of tipping towards the world of vertically integrated utilities, the very situation that led to the inefficient markets and high consumer costs before the energy market was restructured in the mid-1990s. Instead, AReM recommends limiting the IOUs use of the CAM, so that if it is used, it is only for new system resources needed by all customers. AReM registers concern that the IOUs might attribute growth in system needs to direct access (DA) customers, instead of recognizing that the growth is caused by bundled customers, and then shift the cost to the DA customers. Instead, AReM suggests that the IOUs reflect reasonable assumptions about future DA load so as to avoid over procurement, and then there is no need for stranded cost recovery from the DA customers since the IOUs can adjust their portfolios accordingly.