Charting a new course in California [electricity market restructuring]

The California Public Utilities Commission issued a decision in December 1995 that made it official: the investor-owned electric utility industry in California will be restructured to allow for wholesale and retail competition beginning in 1998. Under the plan, an independent system operator will operate, as a single control area, the transmission systems that at present are owned and operated by the three largest investor-owned utilities in the state. The independent system operator will be responsible for ensuring that schedules for use of the transmission system are feasible, operating the transmission system in real time, and settling financially with parties who use the transmission system. It will guarantee open access to the transmission grid, so that no particular group of market participants is favored, wholesale or retail. While wholesale open access is required under Federal law, retail open access is new. A separate power exchange will serve as a daily spot market for electricity with publicly posted prices. That is, an auction will be held daily in which bids will be taken for each hour of the next operating day. The state's plan for competitive power markets is expected to to better serve customers.