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Open Access Publications from the University of California

California's Electricity Crisis: A Market Apart?

  • Author(s): Bushnell, James
  • et al.

The factors most often cited as the causes of the California crisis are the scarcity of generation capacity, a flawed market design, and the venality of electricity producers. However, many of these attributes were present in other electricity markets, none of which have suffered through anything like the California crisis. The only factor not seen in other markets in the world is the lack of contracts or other forms of long-term supply arrangements. Policy efforts are therefore best directed at developing a regulatory and retail environment where contracts are freely entered into at prices reflective of underlying market conditions.

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