But are any of you really surprised about the news coming out of California? I'm not. Anyone with half a brain working in the power industry over the last several years should have seen this coming. Unfortunately, the politicians in charge of implementing deregulation policy in California chose to ignore power market realities. They set up a power market that guaranteed prices would be set too low to support timely investment in new supply. Now, the citizens, businesses, and utilities will be the ones paying the price for their stupidity.
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But don't blame deregulation. The problems in California are the result of a flawed process. Other restructured power markets in Texas, New England, and the Mid-Atlantic region addressed the capacity issue by including a capacity payment mechanism in their new market structure. It's a good thing these states didn't follow California's lead!




