chapter  5
13 Pages

The California Experience

A first step in understanding the California electricity experience is to know that it worked reasonably well for more than two years. The concerns of regulators and researchers ran the gamut, including the procurement of ancillary services, possible noncompetitive pricing, transmission rate structure and congestion management, and dispatch policies of the independent system operator (ISO). In addition, the competitive transition charge (see Chapter 4) and retail price controls led to less entry than expected. However, from the standpoints of prices and reliability, restructuring in California was, initially, reasonably successful. Figure 5-1 indicates that until June 2000, electricity prices in California remained fairly low. Wholesale prices ranged roughly between 1 and 3.5 cents per kilowatt-hour off peak, and peak prices were roughly a penny higher.