The Public Policy Institute of California has concluded that California's energy crisis cost the state as much as $45 billion over two years in higher electricity costs, lost business due to blackouts, and a slowdown in economic growth, according to a recently released study.
SACRAMENTO, Calif. (AP) -- California's energy crisis cost the state as much as $45 billion over two years in higher electricity costs, lost business due to blackouts and a slowdown in economic growth, according to a study released Wednesday.
The report, from the Public Policy Institute of California, concluded there was no one cause for the energy crisis, which peaked in the winter of 2000-01 and led to six days of rolling blackouts.
A shortage of electricity generating capacity, a flawed market design from the state's attempt at deregulation, the grip energy companies had over wholesale electricity prices and regulatory missteps all contributed to the energy crisis that spread to other Western states...
In 1996, the deregulation of California's electricity market was hailed as a historic reform that would lower prices, reinvigorate California's flagging economy, and provide a model for other states to emulate. By 2002, the reform lay in ruins, overwhelmed by electricity shortages and skyrocketing prices for wholesale power. Utilities were bankrupted, the state became the buyer of last resort, and the institutions established by the 1996 reform were dismantled. What happened? In The California Electricity Crisis: Causes and Policy Options, Christopher Weare shows how several factors combined to produce blackouts, financial crisis, and the breakdown of market institutions. It also discusses the major options for rebuilding the electricity sector and offers recommendations for improving the performance of the electricity sector under any particular regulatory and market structure.
Order the study at Public Policy Inst. of CA
