CalPine is simply another victim of the California State Government's refusal to actually deregulate the industry, instead setting up an artificial market mechansim (the ISO) which was staffed with truly naive types (i.e., academics) lacking in real world experience. Then, as it became obvious that this government monstrosity was falling apart, the State government (led by Davis) refused to revisit their creation, instead attempting to shift the blame to the private industry players. It is evident that the State government has learned nothing, as shown by their rule to allow only new plants to bid on SCE and PG&E contracts --- the assumption being that free bidding by producers free to raise prices if their costs go up will not work and that instead the only way to deal with this is via Government coercion. In short, they're still prisoners of socialist error!
There is new legislation that all out-of-state power producers supplying California will have to meet in-state laws. (Kyoto)
Good post. The LA Times left out that important part, for some reason. It's like blaming the original course setting of the Titanic for everything rather than Captain Davis for not steering around the iceberg.