The CPUC: A Policy Leader in Transmission and the Wholesale Market
In addition to regulating the California public utilities’ distribution and sales of electricity to their retail customers in California, the CPUC also represents California’s interests before federal entities and regional organizations in matters involving electric transmission and the wholesale energy market. The CPUC's complementary efforts in electric transmission and wholesale market policies advance California's electricity system and market functions, the state's environmental goals, and lower energy rates far California consumers.
In 2007 alone, the CPUC has represented California's interests via 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:
- A California consumer’s electric bill typically reflects a retail market transaction. In the retail market, California investor owned public utilities (such as PG&E or SCE), which are also known as “load serving entities” (LSEs), sell electricity primarily to residential and commercial customers. LSEs distribute electricity to their customers via low-voltage distribution lines, such as those along city streets.
- In the wholesale market, LSEs purchase electricity from electric supply sources, namely, generators or marketers. This electricity is typically transported on high-voltage, high-capacity, often long distance transmission lines.
Although most California consumers do not have direct access to the wholesale electricity market, wholesale market polices have a significant impact on California consumers by influencing the cost and reliability of electricity. Within the wholesale market, transmission characteristics play a central role in determining costs and reliability. These characteristics include the geographic placement of transmission lines, their lengths, volume of flow, and capacity.
The CPUC’s Role in Wholesale Market and Transmission Policy
Under section 201(b) of the Federal Power Act, 16 U.S.C. § 824(b), Congress has preserved state commission jurisdiction over electric retail service and distribution facilities while granting FERC jurisdiction over transmission service and wholesale electric markets. Because the transmission and wholesale market issues have significant impacts upon the electric retail service and rates regulated by the CPUC, it is critical that the CPUC be closely involved 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 regions 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:
*The content on the Federal and Regional Energy Policy portion of the CPUC website is intended to provide information only, and will be periodically updated. Any views expressed are those of CPUC staff and do not necessarily represent the views of the CPUC itself, which expresses its views only in formal decisions and in filings at agencies and courts. Where appropriate, subject-related decisions and filings are provided as links on this portion of the site.