There's A Silver Lining Around the Cloud of California's Power Crisis

Abstract

“Broken” and “dysfunctional” are
two of many unflattering descriptions
used to describe the state of California’s
deregulated electricity system. Whole-
sale power caps have been cut from $1000/MW to $250/MW. San Diego
residents are urged to ignore their current bill and only pay as much as
they paid for energy last year. A recent report created for Governor
Davis is critical of the current system and, while not calling for
reregulation outright, concludes that restructuring was a bad idea.
With rolling blackouts and soaring prices, California has become
the poster child for what not to do in deregulation. However, deregula-
tion is not the sole cause for the current electricity crisis. Perhaps the
biggest problem in California today is the supply shortage. Simply put,
supply has not matched demand.