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To: patron_anejo_por_favor who wrote (55019)	1/6/2001 6:05:38 PM
From: flatsville	Respond to of 436258

patron- I agree with this wholeheartedly: the root of the Cali Ute crisis isn't so much regulation vs. deregulation, Though this particular experiment was doomed to failure. And I ain't buying this argument that CA needs more power right now (which is not to say that won't change in the not too distant future.) Collusion and complicity on the part of numerous parties have just made it "unaffordable." John E. Bryson, CEO of Edison International, parent company of Southern California Edison, is now an almost omnipresent image on television, appearing in public service announcements exhorting people to conserve electricity. "It would be valuable to have additional power supply in California, but that is not the problem 95, 96, 97 percent of the hours of the year," Bryson told CNN recently. So if that isn't the problem, then what is the problem? I found a few clues in this series of articles: nctimes.com nctimes.com and finally the most interesting of the three-- nctimes.com The copy below is very telling. This story is much more complicated than CA is short of power, CA residents are shielded from price increases and therefore don't conserve etc... Withholding power bids But why would a company willingly pass up profits? Investigators and market analysts have documented extensive evidence that electricity traders have waited until prices rose on California's market this summer before they would commit their power plants to production. This lucrative game of chicken, a form of "virtual withholding" of power, is actually expected during periods of short supply, when sellers are said to have "market power." Executives of Cabrillo and Duke say short of a power emergency, when the ISO is in charge of plant operation, the scheduling of power output is controlled by the unregulated trading subsidiaries of the generators' parent corporations. A report by the ISO's market surveillance committee concluded that traders had successfully used bidding behavior in various strategies to raise prices this summer. A preliminary report by the California Power Exchange found the opposite. The report said tight supplies of power during rising demand caused the high prices, and the authors said they found no evidence of improper behavior by market participants. Maximizing profit The implication is that power traders withheld from some plants to maximize output at other plants that were cheaper to operate, or that supply was restricted to avoid flooding the market and pushing prices back down. "Entrepreneurs are smarter than bureaucrats," McCullough said. "They don't have to explicitly cooperate to game supply and raise prices. "It is essentially like what you do in a bridge game," he said. "You communicate back and forth by bidding." Investigators at the Federal Energy Regulatory Commission and the California Public Utilities Commission have expressed interest in seeing McCullough's data and his final report. Detmers, the ISO's operations chief, vigorously denied that California generators were underproducing this summer. "We did see evidence of withholding in the bidding, but physically withholding we did not see," Detmers said. "No, we didn't witness that at all. In fact, we saw units coming back much faster than we expected after mechanical breakdowns." The preliminary conclusion of the private investigation has proven to be controversial. McCullough announced last week that California had plenty of power-generating capacity this summer ---- an average 32 percent surplus during the state's first 36 power emergencies. Conventional wisdom has held that tight supplies and growing demand for power have handed the generating and trading companies the ability to raise prices.