Journal Article

California's Electricity Crisis

Paul L. Joskow

in Oxford Review of Economic Policy

Published on behalf of The Oxford Review of Economic Policy Ltd

Volume 17, issue 3, pages 365-388
Published in print September 2001 | ISSN: 0266-903X
Published online September 2001 | e-ISSN: 1460-2121 | DOI: http://dx.doi.org/10.1093/oxrep/17.3.365
California's Electricity Crisis

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The paper examines the economic and regulatory factors that led to an explosion in wholesale power prices, supply shortages, and utility insolvencies in California's electricity sector from May 2000 to June 2001. The structure of California's restructured electricity sector and its early performance are discussed. The effects on wholesale market prices of rising natural gas prices, increasing demand, reduced power imports, rising pollution credit prices, and market power, beginning in the summer of 2000, are analysed, The regulatory responses leading to utility credit problems and supply shortages are identified. The effects of falling natural gas prices, reduced demand, state power‐procurement initiatives, and price‐mitigation programmes on prices beginning in June 2001 are discussed. A set of lessons learned from the California experience concludes the paper.

Journal Article.  0 words. 

Subjects: Economic Development and Growth ; Public Economics ; Political Economy ; Public Policy

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