The Situation
The California Public Utilities Commission (CPUC) has opened an investigation or “rulemaking proceeding” to establish criteria for reopening the retail electric energy market. Retail Energy choice was suspended temporarily to ensure that all customers bore a fair share of the costs incurred by the State during the energy crisis. All customers currently contribute to repayment of these costs.

Reopening the Retail Energy Market Now
       • The reasons for implementing the temporary suspension of direct access have been
          addressed by the legislature and the CPUC or are no longer relevant.
       • The right for Californians to have choice in the retail energy market is law at Public
          Utilities Code Section 365 et seq.
       • Californians have already shown their support for consumer choice by voting
          overwhelmingly against Ballot Proposition 80 (2005), that would have significantly and
          permanently restricted customer choice.

Rationale and Support for Lifting the Suspension of Direct Access
       • The Legislature did not intend for the suspension of direct access to continue indefinitely.
       • The State’s Investor Owned Utilities are financially solvent and have returned to
          purchasing supplies for their customers as of January 2003.
       • The procurement authority of The California Department of Water Resources (CDWR)
          has been rescinded.
       • AB 1X directs the Public Utilities Commission to suspend the right to acquire direct
          access “until the department [DWR] no longer supplies power.”
       • The legislature deferred to the good judgment and expertise of the CPUC to determine
          the conditions under which the suspension of Direct Access could be lifted.
       • All of the causes that gave rise to the temporary suspension of retail competition have
         been addressed. The CPUC is moving forward with a determination of how to reopen
         the market and restore competitive choice for California consumers.

Strong Wholesale and Retail Markets Protect
Consumers from Cost Overruns
A well-designed retail electricity market will stimulate the wholesale market, clarify the utilities’
procurement obligations and provide much needed market certainty.
       • Competition causes firms to be more responsive to consumer demands, monitor costs
          more closely, and compete on the basis of price.
       • It spurs innovation as a means for a firm to distinguish itself from its competitors.
       • In any market, there is a need for many buyers and many sellers in order for a market
          to be effective.