The CPUC - A Policy Leader in Transmission and the Wholesale Market
An important aspect of CPUC's role in the energy sector is to represent the interests of California's electric public utility consumers at the federal and regional level. The electric transmission system and California's wholesale markets are the two main features of federal and regional concern. The CPUC's efforts in transmission and wholesale market policies have served to advance California's electric system and market functions and promote California's pioneering environmental initiatives, while ensuring fair utility rates for California's electric public utility consumers.
In 2007 alone, the CPUC has represented California’s interest in the submittal of more than 100 documents to various State, Regional and Federal energy agencies including the Federal Energy Regulatory Commission (FERC), the U.S. Department of Energy (DOE), the North American Electric Reliability Council (NERC), the California Independent System Operator (CAISO) and the California Energy Commission (CEC).
How Transmission and Wholesale Energy Markets Affect Californians
To place transmission policy and wholesale energy market issues in context, it is important to distinguish between retail and wholesale electricity markets.
- In the wholesale electricity market, power suppliers sell electricity to "load serving entities" such as PG&E or SCE. This electricity is typically carried over a high-voltage, high-capacity, often long-distance transmission network, which connects power plants to substations located near populated areas.
- A California consumer’s electric bill typically reflects a retail market transaction. In the retail market, “load serving entities”, sell electricity primarily to residential and commercial customers. This electricity is sent from substations to customers over a low-voltage distribution network.
Although California consumers generally do not have direct access to the wholesale electricity market, wholesale market policies have a significant impact on California consumers by influencing the cost and reliability of electricity. Within the wholesale market, transmission also plays a central role in determining these costs and reliability. The geographic placement of transmission lines, their lengths, volume of flow, and capacity are top contributing factors.
The CPUC’s Role in Wholesale Market and Transmission Policy
CPUC’s direct jurisdiction applies to California’s retail energy market. As electric generating units and transmission facilities often extend beyond California’s borders, these wholesale market entities of the electric system are placed under federal jurisdiction in accordance with the U.S. Constitution’s Commerce Clause. This requires the CPUC’s close involvement in federal electric transmission rate and policy matters, as well as in design and operation of the wholesale markets.
For the same reason, it is important for the CPUC to participate in the North American western region’s transmission planning and coordination processes. Consequently, the CPUC engages with regulatory agencies, organizations and processes beyond California’s borders and jurisdiction. Four main CPUC activities in the transmission and wholesale market arena support the CPUC’s overall mission to promote reliable, safe and environmentally sound energy services at the lowest reasonable rates for California electricity consumers. They are:
In these areas, the CPUC’s numerous informal filings to California’s electricity grid operator, the California Independent System Operator, typically culminate in formal filings to the CEC, DOE and the FERC, the last of these three being the federal agency formally responsible for regulating interstate energy markets.