California's electricity crisis

Abstract

California's new competitive market with independent system operator (ISO), power exchange (PX) and retail choice began operating on March 31, 1998. By and large, the first 2 years of operation were relatively uneventful. While there were early experiences with market volatility, none were terribly surprising, given the unprecedented magnitude of changes from a regulated to competitive electric market structure. Several adjustments were made to ISO and PX rules to address start-up problems and these appeared to work until the summer of 2000. The summer of 2000 was a rude awakening. The market broke down and the hopes for a smooth transition to competitive markets for electricity in California were dashed. In this paper, an overview of California's electricity crisis is presented by the author.