02 March 2001
In retrospect, it was California dreaming
We learn from mistakes. California's foray into deregulation so far is not working. At first, deregulation may have seemed a good idea, but now. . . . For at least one and probably all of the following reasons, the crisis emerged.
Corporate greed
Tyson Slocumb of citizen watchdog group Public Citizen said there's total market control and price manipulation by a few large energy producers inside and outside California.
"These companies are not answerable to any regulation, and they're charging what they want for power. There's no competition within the wholesale market. There's no one to control them anymore, and there's no one to undercut their price. These companies are all posting record profits."
Environmental regulation:
Eric Thode of Enron Power, one of the power producers who sells to the state, cited the shortage of power plants due to the onerous permitting process to which the California Utility Commission subjects prospective plant builders.
He said there are 11,000 megawatts of
proposed power generation awaiting construction because of the power plant siting process. In California it takes a minimum of three years to build a power plant.
Deregulation
California tried to go too fast, too far, too loosely. The uncertainties in the natural gas market and the electric generation market were and are too great to fit into the five-year timeline that California bought.
"Too ambitious a plan," said Michael Shames of the Utility Consumers Action Network and an expert on California's deregulation legislation.
Too much consumption
Mark Mills of the "Digital Power Report" investment newsletter cited the booming economy on the left coast during the mid- and late 1990s.
The industrial and commercial sectors have boomed these past years. The technology sector that has grown the most is information technology. The only kind of energy it uses is electricity.
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