ORIGINAL REPORTING: California regulators see signs of a new energy crisis — can they prevent it?
California regulators see signs of a new energy crisis — can they prevent it? Regulators raise hard questions as choice threatens to stall California’s clean energy policies
Herman K. Trabish, May 18, 2018 (Utility Dive)
Editor’s note: The turmoil created by California’s new customer choice organizations continues to simmer but the state has wildfires distracting it.
California’s regulators see a disruption coming that may not be exactly like the 2000-2001 energy crisis, but could have bigger, wider impacts. The customer choice movement has added dozens of new power providers into the mix. Their inexperience and uncertain place in the regulatory scheme threatens the ability of regulators and policymakers to keep the state's focus on growing clean energy and cutting emissions. Some say it even threatens the state power system's reliability and affordability. Leaders of the customer choice movement sees a plan already in place to prevent another crisis and says current challenges do not stem from the expanding choice movement.
In 1998, after major legislative changes, California shifted its investor-owned utilities (IOUs) into a competitive retail market. It worked until the summer of 2000, when a “perfect storm” of factors drove the wholesale electricity price from Spring 1998’s $40/MWh to $250/MWh at the end of 2000. The IOUs lost an estimated $12 billion to $14 billion. Pacific Gas and Electric (PG&E) declared bankruptcy. Only efforts by the CPUC saved Southern California Edison (SCE) and San Diego Gas and Electric (SDG&E). Total costs reached an estimated $40 billion to $45 billion. Many of the factors that drove the crisis no longer apply. But major legislative changes opening up the power sector to competitive forces are once again being imposed and the market is in turmoil… click here for more
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