1. California Power Deregulation in 1996 Provider selection Fossil fuel (gas, oil, coal) Waste products Renewables (wind, hydro, solar, geothermal) Pricing No caps on wholesale prices Caps on retail prices MIT study indicates pros and cons of caps [Econ. 7/19/01] + moderate price hikes - dampen price signals - discourage investment No encouragement of long-term power purchasing agreements

2. California Energy Crisis EXECUTION FAILURE in 2000 – 30+ Stage 2 Emergencies system at 95% of capacity 12/7/00 – Stage 3 Emergency 98.5% of power reserves consumed brownouts vs. rolling blackouts? 1/17/01 … 5/7/01 blackouts demand at 2/3 of summer demand!  scheduled down time of power plants  plant reached air pollution limit for the year blackouts hit 300,000 customers 1 hour at a time

3. Spot Market Prices Peaked over $1,000/MWh Now capped at $92/MWh Often runs at $60/MWh [Source: Economist 8/30/01] [Source: Economist 1/20/01]

4. Structural Problems in System Opposition to new power supply NIMBY Not In My Back Yard no reserve capacity in the system Dramatic surge in demand Internet new economy requires electricity! System needs real-time metering at point of use Politics of populism

5. New US Power Plants [Source: Economist 7/19/01]

6. Demand vs. Capacity [Source: Economist 1/20/01]

7. Energy Savings Use fewer and more efficient fixtures, appliances, equipment Reduce consumption in ‘standby’ mode Install sensors to turn equipment to timed use, standby, or off etc.