California Crisis Due to Lack of Support for Renewables

Lack of support for renewable energy is a key cause for the energy crisis in California, according to an analyses published in the March issue of Energy Competition Strategy Report.

ATLANTA, Georgia, US, 2001-03-20 <> Despite the highly publicized problems in California, other states continue to report success with electricity deregulation, says the special insert in the newsletter. Pennsylvania, New York and Illinois are examples of states where leaders are taking steps to ensure effective electric competition. New York instituted customer choice administratively, rather than through the more politically charged legislative approach taken in California. The New York model provided flexibility, allowing the State Public Service Commission to look at each utility on a case-by-case basis, analyzing the unique financial, generation, and service territories of each. California made a number of errors in the planning and management of its energy market, including a retreat from the state’s earlier commitments to renewable energy and energy efficiency, making only limited investments in new power plants in the past 20 years, not anticipating the growth in demand in the technology sector, letting its commitment to environmental quality guide its supply options, and structuring a flawed wholesale electricity market. The analysis says powerful forces converged on the state to cause skyrocketing electricity prices, inadequate supplies to meet rising demand, huge losses for energy companies, and rolling brownouts and outright power outages. The report says there is good news for states that are undergoing or contemplating energy deregulation, noting that California has merely restructured its energy supply market rather than deregulating it, and other states can learn from California’s steps. “Some positives have come out of California’s crisis including greater concentration on renewable energy sources, such as solar power and distributed generation, as a way to mitigate supply problems,” it says. Industry associations representing investor-owned utilities and marketers are suggesting ways to solve California’s woes, and their ideas could affect federal legislation. Energy Competition Strategy Report is published by NHI Publications.

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