October 7, 2000

Flaws Cited in California Electricity Market By BLOOMBERG NEWS

ASADENA, Calif., Oct. 6  California's electricity market is not "workably competitive" and needs to be fixed, the California Power Exchange said in a draft report.

Wholesale power prices from May to July more than quadrupled from a year earlier as demand strained supplies during weather that was hotter than normal. Some generators appeared to hold back power at times of peak consumption, waiting until prices surged.

This happened because of "structural flaws in the design of the California electricity markets," the report said. "These design flaws need to be addressed," it said. A final report is expected next week.

The exchange recommended easing restrictions on building power plants and penalizing companies for waiting until the last minute to deliver power. It did not cite a specific power-plant owner, marketer or utility as responsible for the problem.

The nonprofit power exchange was created by the state legislature in 1996 to operate a marketplace where utilities and other big buyers and sellers could get electricity.

The PG&E Corporation's Pacific Gas and Electric, Edison International's Southern California Edison and Sempra Energy's San Diego Gas and Electric buy all their power through the exchange.

Pacific Gas and Electric and Southern California Edison have said they face billions of dollars of losses because rates they can charge customers are frozen far below the rates they had to pay for power on the exchange this summer.

http://www.nytimes.com/2000/10/07/technology/07POWE.html

-- Martin Thompson (mthom1927@aol.com), October 07, 2000

Answers

I wonder if the California politicians and bureaucrats will muck this up. It sounds like they are starting down that path.

-- Loner (loner@bigfoot.com), October 07, 2000.