USA – CALIFORNIA Law and Practice Contributed by: Nora Sheriff, Gwenneth O’Hara, Samir Hafez, Antonio Carrejo and Elisa Rivas, Buchalter
Buchalter 1000 Wilshire Blvd Ste 1500 Los Angeles CA 90017 USA Tel: +1 213 891 0700 Web: www.buchalter.com
1. Structure and Ownership of the Power Industry 1.1 Law Governing the Structure and Ownership of the Power Industry California’s power industry is divided into five key segments: • transmission; • storage; and • supply (retail sales). Key entities involved in these various segments include: • generation; • distribution; • investor-owned utilities (IOUs); • publicly owned utilities (POUs); • independent power producers (IPPs); • community choice aggregators (CCAs); and • direct access (DA) energy service providers (ESPs). The California power industry is primarily unbun- dled, meaning that no single entity typically controls the entire process. This is a result of Assembly Bill (AB) 1890 (1996), known as the “Utility Restructuring Act”, which initiated the unbundling of generation from transmission and
distribution for IOUs. The legislation introduced competition in the supply segment, transferred grid operation to the California Independent Sys- tem Operator (CAISO), and led to the eventual rise of CCAs and third-party suppliers. Generation Generation is the production of electricity, and is performed by IPPs, IOUs, and POUs. Distribution Distribution is performed by IOUs or POUs within exclusive, state-regulated service areas. These entities are required to provide distribu- tion service to all customers in their designated territories. Transmission Transmission consists of high-voltage lines owned by a combination of IOUs, POUs and private independent developers. Nearly all transmission within the CAISO balanc- ing authority area is centrally operated by CAI- SO, regardless of ownership. However, POUs, like the Los Angeles Department of Water and Power (LADWP) and Sacramento Municipal Util- ity District (SMUD), maintain separate ownership and operational control of their own networks outside the CAISO balancing area authority.
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