To: Maurice Winn who wrote (7441 ) 8/21/2001 2:14:10 AM From: portage Read Replies (2) | Respond to of 74559 >>In California, if prices had been allowed to rise to what the market would bear, there would not have been blackouts, production would have been saved and people would be happier. Nah, Maurice, not so. People would have been very unhappy as home utility bills leaped upwards to $600 + per month and businesses shut their doors because they wouldn't have been able to pay their energy bills. The "market" here was perverted in an altogether different way - by enabling spot market pricing to set the rates for all providers at the highest bid for the last incremental unit, providers with multiple generators were incented to take some of them off line to create artificial shortages that allowed extreme gamed prices to apply on their other generating units. The "shortage" was one of artificial supply reductions, not demand exceeding the normally available supply. Up to one-third of supply was off-line during this period of regulatory hands-off, and this was 300% higher than any other levels of outages during the prior three years. This caused the stage I-III emergencies and subsequent price gaming, during seasons of typically moderate energy use, where demand was actually 30-35% below normally available supply. Since prices have been capped, these tricks no longer work, and we're not seeing the artificial outages. The only risk of real shortages at this time comes with extreme heat statewide, or failure of key infrastructure components. There have been no blackouts since the caps were imposed. The maximum rates are not capped below cost - just below the obscene windfall wholesale rates charged during the gaming. This was the necessary short term solution to the gouging. Long run, it will be more complicated.