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Lots of states have deregulated. but other states have not had the experience of California. What makes California different that deregulation failed so badly?

by ars 7y ago

SamReidHughes 7y ago
Well, the current situation couldn’t happen in states with low risk of wildfires...
m463 7y ago
"According to a 2007 study of Department of Energy data by Power in the Public Interest, retail electricity prices rose much more from 1999 to 2007 in states that adopted deregulation than in those that did not.[23]" https://en.wikipedia.org/wiki/California_electricity_crisis https://en.wikipedia.org/wiki/California_electricity_crisis
roenxi 7y ago
"Deregulation" is a term that doesn't convey much information. In Australia we 'deregulated' the power industry. That means that we swapped shareholders in for government collecting the profit and removed some of the regulations. The problem is that the remaining regulations created a hugely complicated market and still involved a lot of price controls for arbitrary things. Eg, "network charges component of retail electricity prices is set ... by the Australian Energy Regulator ... based on ...operational and maintenance expenditure" [0]. So we have an unregulated market where the cost of electricity goes crazy because wholesalers overspend on grid maintenance and get no-risk profit. I don't know how California tried to do it, but in Australia deregulation didn't mean 'try and set prices using a market'. That was too hard and they didn't manage to set up a system that worked. It meant 'try and redirect profit from government to private enterprise'. Not surprisingly, the whole system is a disaster and worse than if they hadn't ever tried. I still think an actual free-market system would have worked but the design might be too delicate to run the political gauntlet and get legislated. [0] https://www.rba.gov.au/information/foi/disclosure-log/pdf/101115.pdf https://www.rba.gov.au/information/foi/disclosure-log/pdf/10... - I think I'm characterising the situation fairly but rely heavily on general knowledge.
masonic 7y ago
California's marketplace was set up to be easily gamed by the likes of BC Hydro and Enron. Follow the money. https://en.wikipedia.org/wiki/California_electricity_crisis https://en.wikipedia.org/wiki/California_electricity_crisis

Lots of states have deregulated. but other states have not had the experience of California. What makes California different that deregulation failed so badly?

by ars 7y ago

Lots of states have deregulated. but other states have not had the experience of California. What makes California different that deregulation failed so badly?

SamReidHughes 7y ago

Well, the current situation couldn’t happen in states with low risk of wildfires...

m463 7y ago

"According to a 2007 study of Department of Energy data by Power in the Public Interest, retail electricity prices rose much more from 1999 to 2007 in states that adopted deregulation than in those that did not.[23]" https://en.wikipedia.org/wiki/California_electricity_crisis https://en.wikipedia.org/wiki/California_electricity_crisis

roenxi 7y ago

"Deregulation" is a term that doesn't convey much information. In Australia we 'deregulated' the power industry. That means that we swapped shareholders in for government collecting the profit and removed some of the regulations. The problem is that the remaining regulations created a hugely complicated market and still involved a lot of price controls for arbitrary things. Eg, "network charges component of retail electricity prices is set ... by the Australian Energy Regulator ... based on ...operational and maintenance expenditure" [0]. So we have an unregulated market where the cost of electricity goes crazy because wholesalers overspend on grid maintenance and get no-risk profit. I don't know how California tried to do it, but in Australia deregulation didn't mean 'try and set prices using a market'. That was too hard and they didn't manage to set up a system that worked. It meant 'try and redirect profit from government to private enterprise'. Not surprisingly, the whole system is a disaster and worse than if they hadn't ever tried. I still think an actual free-market system would have worked but the design might be too delicate to run the political gauntlet and get legislated. [0] https://www.rba.gov.au/information/foi/disclosure-log/pdf/101115.pdf https://www.rba.gov.au/information/foi/disclosure-log/pdf/10... - I think I'm characterising the situation fairly but rely heavily on general knowledge.

masonic 7y ago

California's marketplace was set up to be easily gamed by the likes of BC Hydro and Enron. Follow the money. https://en.wikipedia.org/wiki/California_electricity_crisis https://en.wikipedia.org/wiki/California_electricity_crisis