CA Energy Crisis

A detailed Summary of CA Energy Crisis

After dodging power outages for many months, California experienced its first power outage on January 17th, being the first time since World War II when state officials ordered blackouts to protect the coast from the Japanese. The blackouts stretched from Central California to 500 miles north at the Organ border, leaving 657,000 homes and businesses without electricity for several hours at a time. The blackouts continued left the affected areas in a state of chaos along with billions of dollars lost in sales, productivity, and wages. Many blame the power shortages on the 1996 deregulation which had promised to lower the consumer's power bills by providing a competitive market, ironically wholesale prices later skyrocketed to over $300 per megawatt in December of 2000. After the opening of five power plants earlier this summer, the power crisis has pretty much diminished, but later last year and earlier this year businesses in Silicon Valley were questioning weather or not they should stay in California and risk losing millions more.

Companies who have an "interruptible" energy source contract with the energy companies, which means in exchange for cut-rate electricity they would have their power cut off during an electrici

Deregulation, one a term that was praised for the thought of saving consumers money, is now considered a curse word to many. But with the opening of the five new plants this summer who have come online, and several in the process, California looks as though it is in the clear, if not only for the time being. Companies will continue questioning weather or not they should stay here in California and risk losing much needed profit or leave California and experience the costs of moving. But one thing is for sure; the government will consider all aspects of the possible outcomes before they decide to deregulate another business again.

California did have a back up plan for small emergencies if utilities couldn't buy enough to meet demand on the Power Exchange, if an emergency occurred the Independent System Operator (a system which was set up to oversee the power grid) would buy the power on behalf of the utilities at any price. What was supposed to be a last result quickly became a daily necessity. If the plants didn't sell all their electricity in the morning "they were fairly certain to get a call from the operators at the ISO begging them for any electricity they could spare, what ever the price" After the ISO began declaring emergencies the Power Exchange became irrelevant. By December 2000 the ISO was buying 5,000 megawatts an hour, meaning over half of the California utilities needed to buy on the open market was bought in desperation. California's "dream market had broken down"

The genesis of the crisis, which has overwhelmed California, is placed in the failed deregulation plan under which the state's utilities sold scores of their power plants to national power companies, which now sell back the power generated from those plants. State officials assumed the power would be cheaper, but actually two of California's largest utilities, Pacific G

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Approximate Word count = 1261
Approximate Pages = 5 (250 words per page double spaced)

Category: History