4 ms·
California deregulated electricity and in the absence of regulations, electricity providers discovered that they could collude in reducing capacity until prices
by jellicle 6y ago
California deregulated electricity and in the absence of regulations, electricity providers discovered that they could collude in reducing capacity until prices went nice and high, and make continuous windfall profits from then forward.
- pdonis 6y ago> California deregulated electricity "Deregulated" is something of a misnomer here. They removed restrictions on prices and collusion, but did not remove the state-enforced monopolies that different electric providers have in different areas of the state. So they combined the worst aspects of deregulation with the worst aspects of regulation.
- WalterBright 6y agoThe source of that problem was the price for consumers was fixed by the government, while the utility was obliged to pay whatever the wholesale price was.
- coredog64 6y agoPart of this was that CA’s “deregulation” outlawed long term pricing in favor of spot pricing. So it created a situation where providers could “discover” that they needed to take a plant down for maintenance at peak, only to “accidentally” raise the price of electricity. AIUI, long term contracts were seen as opaque, whereas spot pricing wasn’t.