Download California's Electricity Crisis by Sweeney J.L. PDF
By Sweeney J.L.
For policymakers and others with a significant curiosity in getting past finger-pointing, Sweeney (management technology and engineering, Stanford U.) itemizes the chain of occasions that led California to restructure its electrical energy process, the reasons for the failure of that restructuring in 2001, and classes for the long run.
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Extra resources for California's Electricity Crisis
The utility would receive all money collected through the competition transition charge, allowing it to recover stranded costs. The competition charge would pay for the entire stranded costs for the given utility over a target number of years. Thus, under the Blue Book proposal, the CPUC would estimate the total of stranded costs for a given utility and the total amount of electricity that would be purchased by customers in the utility’s service area over the target number of years. 19 The total stranded costs depended on the market-determined wholesale price of electricity.
SWEENEY electricity transacted on the imbalance market, except during those times when demand was unexpectedly large or small. In practice, if utilities expected prices to be significantly lower on the real-time market, they would have a strong incentive to submit an unbalanced schedule, with scheduled resources well short of projected loads. However, the rules did not permit anyone to submit unbalanced schedules. This conflict between the incentives for unbalanced schedules and the requirement that the submitted schedules be balanced could easily be resolved through systematically biasing the projections of loads.
Consumers could continue to rely completely on a local distribution company to purchase and deliver electricity or could opt for direct access through bilateral contracts. Those relying on a local distribution company could agree to either pay the average cost of electricity throughout the year or pay a real-time price, a price that varied on an hour-by-hour basis with changing wholesale market conditions. Those paying a real-time price could choose hedging contracts with third parties to reduce the risk.