Califronia scheming

enterrpiseeconomy.com ^ | july 10, 2002 | charles oliver

[john bell hood]

California authorities recently declared their first power alert in more than a year. And residents are worried that the hot summer might bring back the rolling electricity blackouts that hammered the state in 2000 and early 2001. Meanwhile, the state government's budget remains strained, having gone from a $12 billion surplus to a $23.6 billion deficit in less than a year, due largely to expensive electricity purchases. California officials continue to blame deregulation and to vilify private companies for the state's power problems. But they overlook the role that their bad policies and misguided regulations played in this disaster.

Rest of article.

[john bell hood]

California has been fairly lucky this summer. But we had better pray for a mild August. Gray Davis certainly doesn't know how to handle the state's energy problems.

[NEWwoman]

Gray knows how to handle it badly, then blame ENRON and the Republicans.

[Free the USA]

fyi

[Ernest_at_the_Beach]

Excellent article, affirms what many of us have been saying on the calpowercrisis threads!

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[Dog Gone]

From the article:

California's energy crisis has given energy deregulation a black eye. But two dozen other states have also deregulated their power markets, and they haven't had the problems California has.

Why? Well, unlike California, those states truly deregulated. Those states didn't impose retail price caps, or if they did, the caps were higher and more flexible than California's. That allowed utilities to pass on price increases, and higher prices gave consumers a reason to cut use when supplies were short.

Other states didn't force utilities to divest their power plants or forbid them from making long-term contracts for power. This gave utilities a way to hedge against the risks of sudden price increases.

Other states didn't force utilities into state-run power exchanges. Instead, they left them free to buy power from whomever they wanted. That created competition and increased supplies and helped keep prices down. Pennsylvania started its deregulation program shortly after California "deregulated" its market. Pennsylvania has some 200 wholesale sellers of electricity. California had just 20.

Finally, other states generally did a better job than California at adding new generating capacity. They didn't wait for a crisis to start building new plants. They anticipated growing demand for new power. Texas alone has built 22 power plants since 1996 and has 15 more in the pipeline.

In short, these states gave more than lip service to deregulation. They actually cut red tape.

California officials want to blame the state's power woes on deregulation instead of their own misguided rules and regulations. It would be a shame if they were allowed to discredit a policy that has worked successfully elsewhere, a policy that they never really tried.