Dan Minette wrote:
The bottom line though, is that energy companies used market power to manipulate prices. The recently released GAO report cited six studies, all of which concluded to one degree or another that energy companies withheld electricity in order to drive up prices, and concluded itself that "the exercise of market power by wholesale suppliers was clearly one of those factors explaining the high prices." (Report is at www.gao.gov, search for report # GAO-02-828, pdf file)So what's your theory for the ups and downs (mostly downs) of energy prices. Is your theory that there is actually the grand control room of the energy giants where they sit and plan the next 10 years of prices?Given the fact that there was a shortage in California, and given the fact that there were no fixed priced contracts, am I surprised that companies pushed the law to make money? No. But, you have to ask yourself, why couldn't California buy electricity from anywhere else? The answer is that the available electricity was already committed. Now, I admit that I didn't realize that California had quasi-fixed price contracts, that wasn't clear at the time.
Restructuring (deregulation) was responsible for the conditions that led to the crisis, but from what I understand, energy companies helped the PUC design the restructuring that Pete Wilson signed into law in 1996.
Belden, the guy that pleaded guilty to fraud, is likely to be the first of many at Enron and other energy companies to face criminal charges. So while I don't know that anyone sat and planned prices ten years in advance, I have little doubt that, faced with a situation that could be easily exploited, due in part to their own machinations, they did not hesitate to do so. In all probability, a shortage that may have been little more than a bump in the road was elevated to a full blown crisis due to the illegal use of market power.
So, if it was phony, why didn't you just buy electricity off the grid from
one of a number of different companies?
Because they were in cahoots.
But, that doesn't change the fact that the market prices were driven by a
real shortage.
In light of the GAO report, and Belden's testimony, this is a half-truth.
The Sierra Club, a leftist environmental group if you are not familiar with them, lobbied for years to get new, more efficient power plants built. http://www.sierraclub.org/energy/california/If y'all want to vote down new power plants in the future, and rely on solar and wind for new energy, that's your business. But, ya'll are going to have blackouts again if you do.
"The Sierra Club has long advocated for modernizing or replacing older power plants with newer ones. New power plants are up to 50% more efficient and up to 90% cleaner than older ones. Utilities and power producers on the other hand, have resisted building new plants over the last ten years because, until recently, demand did not force them to do so and because the utilities knew that deregulation would force them to sell off plants."
The Governor was Republican for 16 years until 1998, but the people of the state were barely aware that there was a problem. There were never any blackouts or brownouts or other indications of a problem until 1999, the year after restructuring began. I have never had the opportunity to vote for or against a power plant either in a ballot initiative or as part of a candidate's platform in 22 years.
My opinion, continually being reinforced by the emerging evidence, is that without deregulation and devious, colluding, corrupt energy companies, we would have barely noticed the shortages experienced in '99-'00 however real they were.
Doug
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