California’s inept and poorly conceived market design and rules invited exploitation and sodomy. Never allow naive socialists to design markets and economies. Enron - and many others, were happy to oblige.
I wasn't there (CA), but I was very much in the middle of it nationally. And 'those who knew' were all in dark, smoky rooms. They constructed lamb-suits for the wolf-looking utility mouthpieces to stroll into regulatory halls and connive and swarm the flocks (legislators, appointees, and tech staff) that 'all will be well'... The only time you heard what the real deal was, was when utility tech staff would face off against *other* utility tech staffs, and you (the regulatory tech staff) were there to facilitate. THEN the eyes open wide.
Exactly. And the same thing is currently being done right now to the California carbon credits auction process. Speculators are buying and holding the credits in order to create an imbalance - which ultimately costs the California taxpayer. Again, don’t allow naive socialist politicians to design a marketplace.
"Unclear." The buying of carbon credits raises the market price. The rise in market price would offset/lower the cost of ("green") measures undertaken by the utility (or non-price-regulated entities selling into the larger pool). In so doing, a 25¢/kwh solar unit might be chosen over a 22¢/kwh gas turbine, because of the 5¢/kwh sale of the carbon credit. "Yay, team!" Resources are fully-priced, carbon-adder loses to clean solar, and all that. If you find the carbon credit to be garbage, you cry "Foul!" and observe that CA power users are paying 3¢ too much (depending on whether you believe the credit was purchased with CA dollars or out-of-state dollars). BUT! If CA already had generating fleet "portfolio" requirements to have X% of kwh come from solar by 2020.... then THIS is the [non-market!] criminal forcing fetters upon the utility resource pool. Least Cost Planning be damned. Free market advocates created the cap+trade mechanism to cure the ill of ferociously inflexible, unresponsive, and therefore *terribly* expensive NON-market command+control regulations of the past. Villanization of cap+trade hurts us very much.
California's power problem was caused by deregulation & market manipulation. Had the FERC done its job, there would have been no crisis. Enron was Bush's largest campaign contributor. CEO, Ken Lay, was a long time friend of Bush. Enron alumni also fill prominent slots in the Bush administration. When Vice President Dick Cheney drafted a new energy policy, he met with Lay and other Enron executives. Enron was reportedly the only company to be granted such a meeting. During the crisis Cheney gave lectures on the free market. Enron was the poster boy for corporate geed, collusion, & bought & paid for politicians up to the top slot - the good old boy Texas energy cartel with Bush at the helm. As usual the tax payers got left holding the bag. At least some at Enron were hauled off to prison or blew their brains out. This is what happens when the fox is watching the hen house.
Yeah, I have a buddy who brokers at Amerex who bought Cliff Baxter's house. At least he shot himself in his Mercedes and not in the house
“The cap-and-trade system of emissions trading is very difficult to control and its effects are diluted…It is precisely because I am a market practitioner that I know the flaws in the system," George Soros
I'm a student of Enron and the power crisis, also happened to live in CA at the time of the rolling blackouts, and I'm not remembering any socialism as a root cause here. CAISO is a FERC regulated entity and ultimately responsible for the lack of capacity that caused the blackouts. In fact it was really a FERC failure all around since Enron was also doing stuff like selling power from CA at a loss in other westerns states in order to cause shortages they then exploited, along with "maintenance" shutdowns of plants they controlled. So while CASIO might have been made up of "socialists" at the time I suppose, there wasn't a specific "socialist" rule that caused that market manipulation and ultimately those CASIO rules were all approved by FERC so if you want to scream at socialists you'd need to take it up with Nora Brownell, who I believe was a George W Bush appointee? All of which I know you know, so the throwaway "socialists" comment is a bit frustrating to hear. As you know, power market rules are byzantine to this day and what constitutes "manipulation" is still being litigated all the time in all the ISOs, congestion markets being exhibit A at the moment.
The California Electricity Crisis: Lessons for the Future Dr. James L. Sweeney, Stanford University "Thus the problem in California was not electricity deregulation; it was price regulation at the retail level and rigid regulation prohibiting long-term contracts at the wholesale level. It was an issue of gross mismanagement by the California governor and the CPUC." "The issue is not that deregulation does not work but that it should not be done the California way." "Second, isolation of the supply side of the market from the demand side breeds disaster. Appropriate risk management and analysis are essential. Ultimately, any major restructuring of a system, whether it is a company, the military, or the electricity system, is bound to have problems in the beginning. The system must be monitored, and management must be flexible and quick enough to respond appropriately. Governors and legislatures need to act courageously and wisely and not driven entirely by political expediency."