How the Energy Boys Fucked Over California

Even partial deregulation of the electricity market was a nightmare for California.

In 2000 and 2001, one of the biggest, filthiest, most audacious and wide-scale con jobs ever perpetrated on a state population occurred in California. And even though many citizens chose, reflexively, to blame the “government,” the entire fiasco (other than the state assembly stupidly laying the groundwork for it) was invented and put into play by the private sector.

And once the smoke cleared, and people realized what just happened, California had lost roughly $40-$45 billion,...

It all began in 1996, with Republican Governor Pete Wilson... and the state assembly, seeking to stimulate competition, pushed through a law (AB 1890) calling for the “partial deregulation” of the energy market.

... in the wake of AB 1890, was that the energy companies, seeing the opportunity for astronomical profits, began manipulating the market in ways that no one had ever witnessed or even imagined. They did it by creating shortages where none existed. 

...the energy suppliers began taking steps to diminish supply and increase demand, albeit artificially.

In order to depress supply and raise the price, they began messing with the grid. They illegally shut down pipelines and intentionally took power plants off-line during periods of peak demand by pretending that these facilities needed “maintenance.” Of course, it was all a lie. 

Because California law allowed energy companies to charge higher fees when the energy they sold was produced out-of-state, they engaged in a form of “megawatt laundering” (analogous to “money laundering”), where they disguised the source—disguised it to make California-produced energy appear to have been produced out-of-state.

They also ran “overscheduling” scams. 

... with power now “scarce,” it forced the state to buy electricity on the “spot market,” the cost of which was beyond exorbitant. From April of 2000 to December of 2000, the wholesale price of electricity increased 800%. As the crisis worsened, the state finally appealed to the federal government.

... California was paying more than $1400 per megawatt-hour. Exactly one year earlier, an average megawatt-hour had cost them only $45.

The crisis reached its zenith on January 17, 2001, when Governor Davis declared a state of emergency, and began approving the dreaded rolling blackouts. While Enron and others were reaping astronomical profits by swindling California, the state was flirting with financial ruin. 

image source

Have US citizens learned their lesson about deregulation? 

We just installed a regime dedicated to it on a national level, not just for electricity but the entire economy!

The California experience foreshadows our self-chosen future.

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