Skeeter, I didn't say it was a good system. It wasn't. I said that capacity would have been adequate, on all but a few days, had not the manipulation not occurred. That is true, and anyone who took the time to review the ISO charts could see that. But Davis didn't set up this system - Wilson and the legislators did, at the prodding of the energy marketers.
The point is that several new plants were coming on line in the Spring-Fall of 2001, adding even more capacity (about an extra 10%, if memory serves). They weren't yet up in Winter 2001, when the crap hit the fan. The gaming of the system by pulling down all those existing plants and pinching off the gas forced the situation of "putting the gun to their heads", during a time that energy supply otherwise exceeded demand by about 25%.
Why ? Because nobody at FERC was even concerned or looking into the manipulations until the new Senate forced their hand. Unfortunately, the daily manipulations in Winter 2001 led to enormous price spikes before that, and the only alternative was to sign long term contracts quickly under the gun. Are you saying that Davis should have known that they would play these illegal death star, fat boy, and other manipulations and shut down supply when it was FERC's job to prevent that ? In retrospect, maybe, but who knew the FERC leader Hebert would turn out to be a fanatic and completely ignore this when it became obvious ?
Had there not been manipulation, or if earlier requested wholesale price caps had been instituted by FERC and removed the incentive to game by the providers (the price would have still been higher than anywhere in the country, just not an unlimited spot price that gave the incentive to choke off supply), the spot market would have worked until the new plants came on line, and long term contracts wouldn't have had to be negotiated under the daily panic of provider manipulations. They could have easily been negotiated over time after the caps went in, because the supply was no longer pinched off after that. Because FERC refused to do its job, the crisis atmosphere prevailed in early 2001 while the bushcheney gang and energy pirates sneered. These companies didn't agree to these recent multibillion dollar settlements because they're good corporate citizens or just plain nice guys, but because they were acting illegally.
Don't get me wrong. I don't like Davis very much. I was not at all pleased that he appointed Steve Peace. Peace led the energy dereg. bill through the legislature, but the idea was originally pushed on us and advocated by Pete Wilson. Davis was handed a sack of sh*t by his predecessor when it came to the energy crisis, and worked night and day on the energy problem to try to protect California, once the scope of the FERC enabled manipulation took off. It was FERC's job to regulate the cowboy pirates, and they failed miserably and intentionally. Once the temporary caps went in, they worked beautifully (quite contrary to Cheney's dire lies about what would happen), because there was no longer an incentive to withhold the energy, of which they had plenty to supply.
California's biggest mistake was to ever trust a bunch of assh*les from Texas with their energy provision (not that others didn't join in, but Houston was ground zero). This law was pushed through with hardly any input from citizens -- the big providers bought off the gov't, and consumer advocates got more or less pushed aside in the process back in the mid 90s when they did this. I barely remember the newspapers even covering it.
Even with all that, your point that the system was made for gaming is a weak argument to excuse the illegal manuevers and lack of any oversight whatsoever by FERC while this was happening. I don't buy that line, even if the system wasn't well set up. As the first experiment in this new dereg., FERC should have been all over it making sure this didn't happen. But of course, Wendy Gramm loves not having any oversight in commodities and their derivative instruments.........
This is my last post on this (You're welcome, to all for whom this has become tiresome on a real estate thread <g>) |
