Competitive Market Advocates (CMA)

CMA questions whether the current hybrid market can function under the Commission's current system of having utility rate-based investment in competition with ratepayer funded PPAs. Basically, CMA does not see that the current hybrid market can be compatible with competitive, merchant investment. Instead, CMA proposes that the multiple market improvement efforts underway, including the establishment of RA requirements for all LSEs, and the implementation of MRTU, will lead to a robust and competitive electricity market. CMA asks that the Commission take steps now to ensure that any rate-based or rate-payer backed utility investment authorized in this decision does not undermine the future success of the end-state market structure endorsed by the Commission.

CMA is also interested in the IOUs' need determinations and suggests that in order for the Commission to meet its desired end-state of a competitive wholesale market, the Commission must take action to ensure that barriers to competitive entry are not created. Specifically, CMA urges the Commission to limit ratebased, rate-backed procurement by the IOUs, and to limit the IOUs procurement to the RA requirements. CMA is concerned with the higher need forecasts presented by the utilities that are not specifically tied to the RA requirements and the CEC forecast. Allowing utility procurement in excess of RA reliability standards, CMA states, will distort market signals and create reliance on ratepayers to bear the risk of all new investment and ring a death knell to a true competitive market. Each utility had forecasts in excess of the CEC's forecast and in excess of their RA requirements and each utility presented a different set of justifications for their individualized forecasts. In furtherance of a competitive market, CMA advocates more transparency in the forecasts used by the IOUs to enable market participants to prepare their own forward market analyses to inform their investment decisions in new generation.