The California Energy Crunch of 2000
Let this be a lesson to the rest of us.

In the summer of 2000, the state of California experienced a shortage of electric power due to a rapidly expanding population and their failure to construct new power plants, largely due to the environmental restrictions for which California is famous.  People who have been to California  I haven't  say there are more windmills and solar panels there than in any other state, yet they still don't have enough electricity for normal household consumption at reasonable prices.

[Comments from Deweese (no longer) On Line]:  "The not so-well-known subtext to the current energy problems in California is the abandonment of nuclear power as a source of electrical generating capacity.  Since the 1970s, the needlessly difficult process and endless legal challenges from anti-energy environmental groups have made it uneconomical to build new plants."

This is an important lesson for the other 49 states about the consequences of letting environmental activists influence the state legislature.  And it is yet another example of a story that demonstrates the bias of the national news media.


The latest...
California Restarts Daily Electricity Auction.  Nine years after its state-sanctioned energy auction went bust in the western energy crisis, California is preparing to launch another daily electricity auction on Tuesday [3/31/2009] that it hopes will be more successful.  The new "day ahead" energy market will line up electricity resources for delivery the next day.

California's Potemkin Environmentalism:  [Governor] Schwarzenegger's reputation as an environmental trailblazer is in keeping with California's recent history and self-perception. … In truth, however, the Golden State's energy leadership is a mirage.  California's environmental policies have made it heavily dependent on other states for power; generated some of the highest, business-crippling energy costs in the country; and left it vulnerable to periodic electricity shortages.  Its economic growth has occurred not because of, but despite, those policies, which would be disastrous if extended to the rest of the country.

Fatal Conceit at the California Public Utilities Commission.  After a year of heading in the right direction, the California Public Utilities Commission veered off course last week when Commissioner Dian Grueneich initiated a dangerous move towards old command-and-control regulation.

The Real Cause of Blackouts — It's not deregulation.  Just who is in charge of getting electricity to residents?  Public utilities, which usually means "state-run" and "state-managed" enterprises, perhaps with a veneer of private trappings.  This centralization and cartelization began nearly a century ago, as Robert Bradley points out in Energy:  The Master Resource, when industry leaders agreed to price controls based on a cost-plus formula in exchange for franchise protection from market competition — a formula that survives to this day.

California power upgrade:  Although officials are expressing concern that the energy crisis may return this summer, Gov. Arnold Schwarzenegger and the Bush administration will stage a ceremony today [12/13/2004] to mark the easing of a north-south state transmission bottleneck that sparked blackouts three years ago.

There Is No Electricity Tooth Fairy.  The North American Electric Reliability Council projects that the nation needs about 10,000 megawatts of new generating capacity each year through 2008 to keep up with an annual rise in demand of 1.8 percent.

California's Electrical Mess:  The Deregulation That Wasn't.  In 1994 California enacted legislation intended to deregulate the electric power business in the state and establish a competitive market.  By January 2001, flaws in the California approach had become evident with the state's utilities driven to the brink of bankruptcy and Californians suffering electricity shortages and blackouts.

Power to the People:  An Economic Analysis of California's Electricity Crisis and Its Lessons for Legislators.  During 2000—2001, Californians faced electricity blackouts in winter, the season of lowest demand.  Massive summer shortages loomed, along with huge costs, for years to come.  To keep the lights on, state officials were forced to deplete a healthy budget surplus in order to purchase wholesale power.  These conditions should not only be recalled with clarity but understood within a larger context.  [PDF]

Lights Out:  California's Electricity Debacle.  California's 1996 restructuring law deregulated wholesale prices for electricity, the price utilities paid to purchase electricity.  Because the state effectively prevented the private utilities from entering into long-term purchase contracts, needed power purchases were conducted on the daily spot market.  The Achilles heel of the law was its cap on the retail price that utilities could charge consumers.  When wholesale prices soared, the government-controlled retail price plunged the utilities into a black hole of debt. [PDF]

California Energy FactsPennsylvania, Texas and Florida each produce more electricity than California.  Texas produces twice as much electricity as California.

State-by-state electricity profiles.

The Shocking Truth about the California Energy Crisis

California's Electricity Crisis

The California Power Crunch:  Resources on the power crisis in California and electricity deregulation.

Frequently Asked Questions About California's Electricity Crisis:
Did California really deregulate its electricity market?
Has deregulation worked in other places?
Do we need stronger price caps?
What should California's leaders do now?
What caused the current crisis?

California's Electricity Crisis:  What's Going On, Who's to Blame, and What to Do.

The chickens are in the roost.  It is incredible that the Clinton administration has just now noticed — after seven-plus years in office — that we have an electricity shortage. … We know they understand electricity demand has been growing.  So why is it that on President Clinton's watch nothing has been done on the supply side insofar as electricity is concerned?  The answer is simple:  Al Gore.



Editor's note:
The following item comes from CBS News and is presented in the interest of "balance", since it paints a completely different picture of the California situation.

California Energy Crisis a Sham:  CBS News obtained records showing federal regulators have power plant control room audio tapes that prove traders from Williams Energy called plant operators and told them to turn off the juice.  The government sealed the tapes in a secret settlement and still refuses to release them.



Power Politics is a Poor Substitute for Energy Supply.  While demand has been increasing, new power plants have not been built, nor brought on line.  The inevitable result is shortages.

The tyranny of visions:  part II.  California has long had more than its fair share of busybodies with a vision of the world in which it is necessary for them to force other people to do Good Things.  One of the latest examples is a recent ruling by one of the many busybody commissions in California that people who build houses, or just remodel their homes, will in the future have to have more fluorescent lights and even install motion sensors to control lights – all in the name of saving energy.

Davis Continues Blaming Energy Providers:  California Gov. Gray Davis told Fox News Wednesday he will sue the power companies if they do not cough up the $9 billion in rebates he believes are due in return for "gouging" his state's energy customers.

Analyst says deregulation didn't cause California's energy crisisFred Smith, president of the conservative Competitive Enterprise Group, puts the blame on environmentalists and politicians who didn't see the crisis coming.

The Cause of the California Power Blackouts:  The childish quest for a free lunch is what has led to blackouts all over the state of California.  People trapped in elevators that stopped between floors when the electricity was cut off should understand that this is part of the price paid for years of moral posturing by the environmentalists and the "consumer advocates."

Davis Denies Selling Power During California Blackouts:  A California Assemblyman isn't sure if it was "corruption or incompetence," but he claims the administration of Democrat Gov. Gray Davis sold more than a half-million megawatt hours of electricity earlier this year at a huge loss - at a time when Californians were being told to conserve energy amid rolling blackouts.

California's Dim Bulbs:  California is in the midst of an enormous stupidity crisis.  Californians have been sitting in the dark because ... they didn't turn the lights on.

'Price Gouging' Doesn't Cut It As Reason for Rising Energy Prices:  Maximizing profits is what every business tries to do.  This is not some kind of evil, anti-social practice but, in fact, the mechanism that provides us with the necessities and the joys of life.

Power Price Caps Have Created Shortages, State Officials Say:  Officials in California and Nevada have admitted that controls on wholesale electricity prices throughout the western states imposed by the Federal Energy Regulatory Commission have worsened power shortages.

Time-Of-Day Electricity Pricing:  Most consumers don't know it, but the overnight price for electricity at wholesale can be practically zero.  Utilities and other power producers are sometimes actually forced to pay industrial consumers to use electricity in the early-morning hours -- because it's too expensive to shut down power plants at night.  With time-of-day pricing, consumers would be encouraged to alter their habits -- running the dishwasher at night, for example -- and pounce on such bargains, while evening out demand.

Atlas is Shrugging in California.  California's "rolling blackouts" are the result of the failure of government, not capitalism.

Why Wholesale Price Caps on Electricity Won't Solve California's Energy Woes:  In 1996, California passed a badly flawed utility deregulation scheme.  The botched implementation of this plan, coupled with regulations that discourage the construction of new power plants, produced rolling blackouts and higher prices.

California energy crisis:  This is a case study in how not to deregulate an industry.  Furthermore, it underscores the danger that the extreme environmental movement presents to our largest state and to our Nation.  Through regulations, lawsuits and political intimidation, the "greens" have prevented the construction of the electrical, natural gas and hydro infrastructure necessary to meet the needs of a modern industrial society.

Energy in the Executive:  Bush must stand up against environmentalism and for the American way of life.

Gray Davis Lets the Dogs Out:  With the energy crisis raging in California and his approval rating falling rapidly, Governor Gray Davis is frantically trying to spin his way out of the mess.  Desperate to save his political image and his now damaged Presidential prospects, Davis has enlisted two seasoned political attack dogs to shift the blame for California's energy problems away from himself and on to President Bush, who took office nearly a year after the crisis began.

Paying thru the noseWhen California ran out of power, the out-of-state energy producers jacked up the prices fast.  Of course the Clinton administration did nothing to stop it because that would have meant the Department of Energy and Janet Reno might actually have to do something.

Editor's note:
Barbra Streisand is sometimes called a "limousine liberal."  She wants you to conserve electricity by hanging your clothes on a clothesline so that there will be enough electricity available to run her electric dryer.  This is typical liberal hypocrisy.  And the California Power Crunch is of interest to many people because California is the first of many states which will experience the same thing if environmentalism is allowed to displace common sense as the population grows and energy demands increase.

Streisand Tells Californians To Hang Their Clothes Out To Dry.  Singer and liberal activist Barbra Streisand called on Californians Monday to use their clotheslines and not use electric dryers in order to help the "Golden State" conserve energy.

Greens Say "Turn Off Your Lights".  The Greens, who brought about that State's energy crisis, wants to worsen it by reducing the dam's hydroelectric generation in order to protect salmon while millions of Californians wait for the next rolling blackout.  If this isn't insanity, I don't know what is.

California's Next Crisis?  The Golden State may soon run out of water, too.  The problem:  California is currently home to more than 34 million people, each and every one of whom gets thirsty from time to time.  It will have closer to 50 million in 20 years.  The state also hosts such multi-billion dollar industries as agriculture, tourism, and computer production, all of which require a steady flow of agua to stay afloat.  Rounding out the cast of characters is a hardcore environmental lobby that earnestly defends every inch of undeveloped land as indispensable for the state's ubiquitous endangered species.  They all want water, but there isn't enough to go around.

Report:  State grid operator behind plant's output swings:  The operator of the state's power grid has acknowledged that it was responsible for swings in production at a power plant that Gov. Gray Davis held as an example of price gouging by out-of-state energy companies.

The Link between Regulation and Power Blackouts:  Nuclear power is a controversial issue in some parts of the United States.  But that is not necessarily the case around the country.  For example, the Calloway nuclear power plant is owned and operated in Missouri by the Union Electric unit of Ameren-UE.  Most Americans have never heard of Calloway.  That is because it is a reliable and trouble-free provider of electricity.  No government official tried to prevent it from going into operation.

Former Clinton Aides Reveal Ties to Cal. Power Company:  Former Clinton White House officials Chris Lehane and Mark Fabiani officially disclosed their relationship Thursday [6/21/2001] with Southern California Edison, a power company that recently struck a high-dollar deal with the state of California.

Energy solutions mean ignoring eco-nuts.

Price Controls and the California Blackouts:  An Old Problem Returns:  Price controls have a record of causing shortages going back at least as far as the days of the Roman Empire.

California's Philosophical Blackout:  The roots of the California power crisis lie in the repudiation of objective language and logic, and the outlawing of human values.  And the sum of this "game" really is zero.

The Art of the Impossible.  As a noted economist has pointed out, nothing "could prevent the California electorate from simultaneously demanding low electricity prices and no new generating plants while using ever increasing amounts of electricity."  You want the impossible?  You got it.  Politicians don't get elected by saying "No" to voters.  Of course Californians also got electricity blackouts and, in order to deal with the blackouts, a multi-billion dollar surplus in the state's treasury was turned into a multi-billion dollar deficit, followed by cutbacks in various other government programs, followed by calls for higher taxes.

Environmentalists Square Off in Squirrel Squabble:  When a Pacific Northwest utility company announced in January [2001] it would build the world's largest wind power plant, it came at a moment when the West was feeling the pinch of energy-starved California.  But there's a problem:  The Washington ground squirrels, which are protected under the Oregon Endangered Species Act.

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Updated February 2, 2012.

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