qrk said:
As I understand it, we, the Californicators, voted to "deregulate"
(allowed to trade power on the open market,
Not an open market, but--by law--a specific, single,
state-run market.
The intent was to create a public distribution infrastructure,
then have producers / suppliers compete to deliver on it.
Consumers would thus get the benefit of providers competing
for their business.
But it was brain-dead from the start.
California's "deregulation" leading to the Enron debacle required
a) utilities to sell their generating plants and
b) become retailers of energy which
c) they were required to buy daily, on a government-created
spot market,
d) at spot prices,
e) and sell at fixed prices set by the California Public Utility
Commission.
Electricity is used the moment it's created and there's not a
lot spare to be had. The result was that Enron could buy and
withhold a small chunk and make everyone else frantic to cover
their customer's needs, causing a daily panic. Enron could
then sell to desperate buyers at a handsome profit.
Long-term supply contracts, which normally provide a great
deal of stability and predictability, were expressly
forbidden by the new law.
When their price of fuel increased ~500-1,000%, the utilities
applied to the CPUC for an emergency 20% rate increase.
Application denied. (rough numbers here, don't quote me.)
What could possibly be more regulatory or meddlesome than
forcing a company to buy at market rates, but sell at
regulated rates BELOW their cost?
Cheers,
James Arthur
olitical/economic in nature. Any thoughts? Thanks
