Comments on Draft Decision
The draft decision of the ALJ in this matter was mailed to the parties in accordance with Pub. Util. Code § 311(g) and Rule 77.1 of the Rules of Practice and Procedure. Comments were filed by June 28, 1999, and reply comments were filed by July 6, 1999. The draft decision was modified after consideration of these comments.
1. The Preferred Policy Decision requires that for a defined period of time, PG&E, SDG&E, and SCE each bid all of its generation into the PX and procure electric energy for its full service customers by purchases from the PX. This requirement has become known as the "buy/sell requirement."
2. SCE proposes to enter into traditional power purchase agreements to purchase energy and ancillary services from suppliers other than the PX or ISO and bid such purchases into the PX or ISO markets.
3. SCE concedes that some or all of the 2000 MW bid into the PX as a result of power purchase agreements signed under the pilot may have been bid into the PX spot market absent the pilot program. There is no assurance that the pilot transactions will not displace non-pilot PX transactions.
4. SCE concedes in its Reply to Responses and Protests that it's "bilateral purchases are not `transparent' to the market in the sense that SCE would not publish its prices." The price bid into the PX from pilot transactions would not necessarily be the cost of the power negotiated in the bilateral contract.
5. Under the proposed pilot, those customers most vulnerable to an abuse of market power would have no means of tracking the cost of electric power.
6. SCE's proposed pilot may undermine the goals of AB 1890, and would make piecemeal changes to the market structure upon which the FERC predicated its conditional approval of the operation of the ISO and the PX.
7. On May 25, 1999, Reliant Energy Power Generation, Inc., filed a Motion to Intervene wherein it stated that it owns and operates generating facilities which it bids into the PX and ISO market and therefore has a direct and substantial interest in, and may be affected by, this proceeding. It accepts the record and scope of the proceeding as it stands.
1. Channeling third-party power purchase agreements through the PX does not overcome the fact that SCE would be procuring power on behalf of its ratepayers from an entity other than the PX, which is in direct conflict with the buy/sell requirement.
2. The buy/sell requirement was adopted with specific ends in mind: price transparency, the related market power mitigation, and reduced regulatory burden arising from price transparency, characteristic of a robust and efficient competitive market.
3. Because SCE's proposed pilot works against the goals of price transparency, the related market power mitigation, and reduced regulatory burden, we conclude that it is in conflict with the Preferred Policy Decision.
4. SCE's application should be dismissed without prejudice, and the proceeding should be closed.
5. The Motion to Intervene of Reliant Energy Power Generation, Inc. should be granted.
IT IS ORDERED that:
1. The Motion to Intervene of Reliant Energy Power Generation, Inc. is granted.
2. The application of Southern California Edison Company for authorization to establish a pilot program for reselling bilateral forward purchases into the Power Exchange and the Independent System Operation is dismissed without prejudice.
3. This proceeding is closed.
This order is effective today.
Dated July 8, 1999, at San Francisco, California.
RICHARD A. BILAS
President
HENRY M. DUQUE
JOEL Z. HYATT
Commissioners
I dissent.
/s/ JOSIAH L. NEEPER
Commissioner
I abstain.
/s/ CARL W. WOOD
Commissioner
