See Spot Run

Maybe ElRoY can flesh this out for me.


Now amid all the hue and cry about the CA energy screwups, about how the evil companies suppliers screwed everyone, etc., there is one thing that hasn't been made exactly clear to me: why did the legislature and Gov. Wilson feel that relying on the spot market for energy needs was a good idea?


By their very nature spot markets are volatile, yet it seems that nobody realized that they were playing with fire in doing this. Now, am I to understand that groups like Enron actively lobbied for this form of "deregulation" in the honest belief that this was wise? The bizarre particulars (suppliers were paid the highest current bid? long term contracts were strongly discouraged? Are all of these people nuts?) can only be understood if the principles involved were drunk. I suppose all these idiot legislators believed the hype about ever-growing suppliers invading California and continually depressing prices, which would have been a bonanza for distributors like Edison (and in fact was for a while) since retail consumers were locked in rapaciously high rates. How ironic that this same locked-in rate doomed them when energy costs soared and they were left to buy at panic rates on the spot.


So, my impression is that there really weren't any thieves in the CA crisis (at least beyond the usual stuff) but rather the intellectual failure by everyone to understand that the birthday candles they'd lit were actually sticks of dynamite.