Background
Decision (D.) 00-08-023 and D.00-09-075 authorized PG&E, SCE, and SDG&E to purchase energy and ancillary services and capacity products in the bilateral forward markets under contracts that expire on or before December 31, 2005. This authority was in addition to authority previously granted to the utilities to purchase these services and products in the California Power Exchange's (PX) Block Forward Markets (BFMs).1 Granting this authority was to provide the utilities with additional procurement options to accomplish two primary goals: first, the critical need to reduce prices and hedge against price spikes, and second, to increase the supply sources on which the utilities may rely.
In D.00-12-065, prompted largely by our concern that SCE, SDG&E, and PG&E were not taking advantage of opportunities to enter into bilateral contracts, we proposed guidelines for the types of contracts we would consider reasonable. We acted in response to Governor Gray Davis' request that we "expeditiously develop benchmarks to assure the reasonableness of these contracts without unfairly `second guessing'" the utilities' purchase decisions. Governor Davis asked that we complete this process early in 2001 to provide adequate opportunity for contracts to be negotiated and in place before summer 2001. (See Letter of Governor Gray Davis to Chairman James Hoecker, Federal Energy Regulatory Commission, December 1, 2000.) D.00-12-065 solicited comments by filed on January 8, 2001.
Several parties filed comments, including Automated Power Exchange (APX), California Cogeneration Council (CCC), California Power Exchange (CalPX), Dynegy Marketing & Trade (Dynegy), Independent Energy Producers Association (IEP), PG&E, Renewable Generators2, SDG&E, The Utility Reform Network (TURN), and Western Power Trading Forum (WPTF, Office of Ratepayer Advocates (ORA) And Southern California Edison Company (SCE).
1 A full regulatory history of forward power purchasing authority and the utilities' actual use of forward markets may be found in the Commission's November 22, 2000, filing at the Federal Energy Regulatory Commission (FERC) in response to the order issued by the FERC on November 1, 2000 (Docket No. EL00-95-000). See especially Exhibits PUC-11 and PUC-12. 2 Renewable Generators are composed of Enron Wind Corporation, FPL, Energy, LLC, and Caithness Energy, L.L.C.
