Moronic statement, as moronic as Freeman and the goons who did the contracts. They felt they had to do the long-term contracts so they could get the *average* price down. why? so they didnt have to pay it all at once. They coul dhae saved billions if they only did 2 year instead of 10-year, but the FULL COST would have shown up on Davis' watch, and that would not be good "PR".
All the analysts who know energy markets were saying that you DONT do a long-term deal then the price has spiked up like that. They all knew it was not sustainable on supply-demand basis.
What was the *right* answer? The OPPOSITE OF WHAT DAVIS DID. He waited too long to act. He failed to raise retail rates enough until the end, when he finally did that sucked the wind out of demand. He negotiated long-term rates but didnt let the utes do it 12 months earlier, which alone would have saved tens of billions all around and would have stopped the crisis. He kept demagoguing the issue when that was soooo counterproductive to getting supply online.
I could go on and on. Davis treated this as a PR problem and not the real problem of flawed regulation. The root problem was that retail rates were regulated and wholesale rates were not, so when wholesale went above retail rates, there was an unsustainable situation. in that case, you want to NIP IT IN THE BUD. He had since June2000 to do that, but dithered for 9 months because he is a political COWARD, and so ended up costing Cali billion$. He should PAY for his COWARDICE by losing his job.
Look at it this way. If a factory worker destroys millions in factory equipment, they lose their job. If a CEO loses money one year, they get canned or asked to "retire".
WHAT TO DO YOU DO WHEN YOUR GOVERNOR COSTS YOU $40 BILLION????
Absolutely right there. It was an off balance sheet thing. But 2 year contracts would not have cut the prices, at least in the short term. And I think it fair to say, the collapse in spot prices took everyone by surprise. There does appear to have been some price fixing and withholding of supply. Quite how all that has played out, I am not sure.
Amen!