The Trouble With Electricity Markets and California's Electricity Restructuring Disaster

摘要: Beginning in June 2000, California's electricity wholesale market produced extremely high prices and threats of supply shortages. The situation led to a utility bankruptcy, large retail price increases, great political turmoil. But is only the most recent visible example trouble with deregulated markets. di±culties that have appeared California elsewhere are intrinsic design current markets: demand exhibits virtually no responsiveness faces strict production constraints very costly storage. Such structure will necessarily lead periods surplus shortage, latter resulting from both real scarcity sellers exercising power. Extreme volatility pro ts be outcome. This result, however, not inevitable. By encouraging price-responsive long-term contracts for electricity, policy makers can create markets function much more smoothly. * Director, University Energy Institute (http://www.ucei.org) E.T. Grether Professor Business Administration Public Policy, Economic Analysis Policy Group, Haas School Business, California, Berkeley, CA 94720-1900. http://haas.berkeley.edu/~borenste. revised version POWER Working Paper PWP-081 (January 2001), \The Trouble Electricity Markets (and some solutions)." I bene tted deal discussions Carl Blumstein, James Bushnell, Erin Mansur, Paul Joskow, Steve Puller, Stoft, Frank Wolak, Catherine Wolfram, Hal Varian, but opinions this paper do re°ect their views. Mansur provided excellent research assistance. $ ( ! # ' , . A 1 !# " 8 % + @ B 0 !C 2 D E d qY$R }„‚R{„$} $Bt $R {‚„ s$tjk tB tB%‚j R‚‚ FBR,Bb w1(((D PB„ ‚-s8}j‚ AZ {Bt „s{ R Ys%‚ Btjk „‚{‚t jk A‚‚t s{{‚} ‚I Ak „‚ Zjs B„R $t ]sj$PB„t$s stI „‚sjT $8‚ s$j }„${$t $jj s }„$B„$ k stk „‚R „Z{ Z„‚I 8s„,‚ ]BR TBPTR‚„%${‚ ‚&‚{ $%‚jk {BR T}jZR A‚ b‚‚t Y‚ %‚„ ${sjjkT$t ‚ „sT Z $j$ {ZR B8‚„R bY‚„‚ }sk8‚t sI`ZR %$„ Zsjjk sjj {Yst ‚R k:R BP }„BIZ{ *‚P‚tR‚ YsR ‚t {BtIZ{ Y$R bsk > F 334 G ,+7* 0* +7* n / 33H ; =#