CA Energy Crisis
After dodging power outages for many months, California experienced its first power outage on January 17th, being the first time since World War II when state officials ordered blackouts to protect the coast from the Japanese. The blackouts stretched from Central California to 500 miles north at the Organ border, leaving 657,000 homes and businesses without electricity for several hours at a time. The blackouts continued left the affected areas in a state of chaos along with billions of dollars lost in sales, productivity, and wages. Many blame the power shortages on the 1996 deregulation which had promised to lower the consumer's power bills by providing a competitive market, ironically wholesale prices later skyrocketed to over $300 per megawatt in December of 2000. After the opening of five power plants earlier this summer, the power crisis has pretty much diminished, but later last year and earlier this year businesses in Silicon Valley were questioning weather or not they should stay in California and risk losing millions more. Companies who have an "interruptible" energy source contract with the energy companies, which means in exchange for cut-rate electricity they would have their power cut off during an electrici
" The genesis of the crisis, which has overwhelmed California, is placed in the failed deregulation plan under which the state's utilities sold scores of their power plants to national power companies, which now sell back the power generated from those plants. Intel has also sent a letter to Senator Dianne Feinstein stating unless they receive reliable power "they will search for power elsewhere. The debate over market power is that many see the rising prices as something more complicated. By December 2000 the ISO was buying 5,000 megawatts an hour, meaning over half of the California utilities needed to buy on the open market was bought in desperation. There is no one to blame for the power emergency, but many are blaming a lot of people, or things, anyways. And if there is no other choice at a restaurant than pesto sauce, its price can go even higher. Utilities, state regulators, ISO annalists, and class-action lawyers say California had a real shortage for only a few amount of hours and the power plant operators made up the rest to increase their profit. Consumers who were served by large utilities received a 10% rate cut immediately and the utilities received a competition-free period of 4 years where the low wholesale prices would allow them to collect the money to pay their debts. In May of 2000 the price pf power went from $30 per megawatt hour of electricity to $146 in June to as much as $1,000 at peak hours. Companies will continue questioning weather or not they should stay here in California and risk losing much needed profit or leave California and experience the costs of moving. The same thought is running through the minds of Silicon Valley corporations, they want to stay in California but if the power isn't reliable they must go somewhere else or loose business. They believe there is enough basil to go out for everyone who wants some but is only putting out enough basil for 100 people, thus allowing the local grocery stores to crank up the prices expecting buyers to be searching frantically for basil right before dinner, "they will be bidding up the prices long before there is an actual shortage. Many agree that it is no one person's fault. The theory was California would sell their power plants and independent companies would produce less expensive power the utilities could buy in a new market place called the California Power Exchange.
Common topics in this essay:
Power Exchange,
Central California,
George Bush,
Exchange Consumers,
Silicon Valley,
Dianne Feinstein,
System Operator,
Ironically California's,
Mother Nature,
Dallas Texas,
power exchange,
power plants,
stay california,
market power,
pesto sauce price,
acting sooner,
utilities buy,
buy power,
buy market,
questioning weather stay,
sell power,
utilities buy market,
blame power,
california risk losing,
weather stay california,
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Acceptance Essays
