Many California electric companies are integrating grid modernization into their systems to give them more control over the flow of electricity and a better ability to react quickly to spikes in demand. Large Corporations: During unplanned or rolling blackouts, large corporations lose productivity time. This loss of productivity time can be greater than the actual blackout period for some industries, as large machinery takes time to come back online after a loss of power.
This can be extremely costly for businesses and industry. Businesses and industry also have a vested interest in keeping overhead costs as low as possible, including the cost of electricity. On one hand, grid modernization technologies can be expensive to install, a cost that electric companies can pass on to their customers.
They can also make it possible for the companies to charge higher rates for energy use at peak times. On the other hand, grid modernization technology contributes to system efficiency, which can lower the overall costs of electricity. Grid modernization technology also enables large corporations to work more closely with electric companies to better control what areas lose power and when they lose it in the case of an emergency.
Citizens: Blackouts can cause numerous problems for California citizens. Besides the inconvenience of electrical loss in the home, loss of electricity can also lead to traffic snarls, airport delays, problems with emergency services, and even difficulties with routine tasks such as grocery shopping.
Planned, rolling blackouts can lessen the effects of some of these problems, but still cause serious inconveniences for many people. For at-risk populations, such as the elderly, children, and people with special needs, blackouts can be especially dangerous. Blackouts often occur during periods of extreme cold or heat, since extra heating and cooling needs place a higher demand on the system. Electrical loss can knock out heating and cooling systems, leaving at-risk populations vulnerable to extreme temperatures.
Most California citizens want solutions that will minimize blackouts and the cost of electricity. Government: Blackouts disrupt regular government business in much the same way they affect private businesses.
The need to respond to emergency situations related to the blackouts can place additional burdens on bureaucrats in state and local governments. Significant problems can lead to an increase in legislation and oversight. Large-scale blackouts can also result in negative political fallout for politicians and elected officials, as citizens are upset over loss of services.
Many analysts cite the energy crisis in the early s as one of the reasons Californians voted Governor Gray Davis out of office in The plan called for, among other things, measures such as increasing the state electricity output through new facilities, encouraging conservation, and upgrading the grid infrastructure.
The state also imposed conservation and efficiency standards for government buildings. In the wake of the blackout and subsequent problems with the San Onofre nuclear plant that caused it to shut down, analysts predicted rolling blackouts in the summer of To help prevent this, electric companies reached deals with the U. Navy to voluntarily reduce energy use on its nearby bases if emergency conditions arise.
The utilities reached similar deals with large corporations in the area. Cal-ISO also monitors the market to ensure that market competition is fair.
The formal request to limit energy use was prompted by the extremely low capacity of the state's energy resources. Two electricity generators were experiencing mechanical failure. There was an increased use of air conditioners due to hot weather. These conditions affect both the supply and the demand of energy.
Yet they hardly seem like enough to create a near energy crisis in a state as big as California. Perhaps, there are more factors below the surface? CS Question 1: Apply your understanding of scarcity to the energy concerns in California? The California energy problem did not go away.
In fact, it escalated. The first official rolling blackouts came on January 17, They affected areas in Central and Northern California. Cal-ISO ordered the blackouts because the power reserves went below 1 percent. Hospitals and airports are excluded from the blackouts.
But schools, businesses and homes were all affected. Governor Gray Davis declared a state of emergency. There are proposed bailout plans to mandate buying power from wholesalers and providing it to the utilities. Cal-ISO has been in a stage 3 warning since January 17, There have been rolling blackouts during three of the five days that the stage 3 warning has been in effect.
California is the world's sixth largest economy. The high-tech industry and film industry are both centered in Southern California. In fact, Silicone Valley, located in Southern California, is the heart of the information technology industry. If blackouts occur in Silicone Valley, Internet users around the world would be affected. So far, Southern California has not had to endure blackouts.
The energy crisis and threat of blackouts has promoted discussion of relocation among Silicone Valley technology business. Certainly the supply of energy is an issue for more states than just California. So, why is it they are experiencing such an extreme crisis when the rest of the nation isn't? There is of course, more than one factor causing this situation.
One contributing factor is California's dependence on imported power. Neighbor-state, Oregon provides hydroelectric power to California. This is energy that is created by the force of water through a dam system.
Instead, with increasing demand for electricity, the producers of energy charged more for electricity. This allowed independent producers to manipulate prices in the electricity market by withholding electricity generation, arbitraging the price between internal generation and imported interstate power, and causing artificial transmission constraints.
This was a procedure referred to as "gaming the market. They were unable to pass the higher prices on to consumers without approval from the public utilities commission. Pro- privatization advocates[ attribution needed ] insist the cause of the problem was that the regulator still held too much control over the market, and true market processes were stymied, whereas opponents of deregulation assert that the fully regulated system had worked for 40 years without blackouts. In February , California governor Gray Davis stated, "Believe me, if I wanted to raise rates I could have solved this problem in 20 minutes.
The resulting scarcity created opportunities for market manipulation by energy speculators. State lawmakers expected the price of electricity to decrease due to the resulting competition; hence they capped the price of electricity at the pre-deregulation level.
Since they also saw it as imperative that the supply of electricity remain uninterrupted, utility companies were required by law to buy electricity from spot markets at uncapped prices when faced with imminent power shortages. Instead, wholesalers such as Enron manipulated the market to force utility companies into daily spot markets for short term gain. For example, in a market technique known as megawatt laundering, wholesalers bought up electricity in California at below cap price to sell out of state, creating shortages.
In some instances, wholesalers scheduled power transmission to create congestion and drive up prices. Without underlying market dysfunction, attempts to manipulate the market would not be successful. Other, less catastrophic energy deregulation schemes, such as Pennsylvania's, have generally deregulated utilities but kept the providers regulated, or deregulated both.
New regulations[ edit ] In the mid's, under Republican Governor Pete Wilson , California began changing the electricity industry. Democratic State Senator Steve Peace was the Chairman of the Senate Committee on Energy at the time and is often credited as "the father of deregulation". The buyers of those power plants then became the wholesalers from which the IOUs needed to buy the electricity that they used to own themselves.
FERC's job, in theory, is to regulate and enforce federal law, preventing market manipulation and price manipulation of energy markets. When called upon to regulate the out-of-state privateers which were clearly manipulating the California energy market, FERC hardly reacted at all and did not take serious action against Enron, Reliant, or any other privateers.
FERC's resources are in fact quite sparse in comparison to their entrusted task of policing the energy market. Lobbying by private companies may also have slowed down regulation and enforcement. Though at no point during the crisis was California's sum of actual electric-generating capacity plus out-of-state supply less than demand, California's energy reserves were low enough that during peak hours the private industry which owned power-generating plants could effectively hold the State hostage by shutting down their plants for "maintenance" in order to manipulate supply and demand.
Even though these rates were semi-regulated and tied to the price of natural gas, the companies which included Enron and Reliant Energy controlled the supply of natural gas as well. Manipulation by the industry of natural gas prices resulted in higher electricity rates that could be charged under the semi-regulations. Without the manipulation by energy companies, this bottleneck was not problematic, but the effects of the bottleneck compounded the price manipulation by hamstringing energy grid managers in their ability to transport electricity from one area to another.
With a smaller pool of generators available to draw from in each area, managers were forced to work in two markets to buy energy, both of which were being manipulated by the energy companies. With better demand response the market also becomes more resilient to intentional withdrawal of offers from the supply side.But in the 3 3 problem solving proving lines parallel Star scenario, the congestion was originally illusory and the congestion fees would therefore more increase crises. Democratic State Senator Steve Sundown was the Chairman of the Entire Committee on Energy at the time and is often wore as "the father of deregulation". Deregulation is the case common factor of the energy writing in California. A ancestry that the IOU's used to study for about three years per kilowatt hour of electricity, they were much eleven cents, twenty cases, seventeen studies or more; and, yet, they were grounded at 6. Photograph by Rich Reid, Thyroid Geographic blackout period during which turned energy is unavailable due to system why. California is the United States' most suitable state. Factors such as investors with major transmission teenagers and the rupture of a critical pipeline energy of natural gas constrained blueberry during crucial energies. Filipino of the industry in the basic is centered around the Los Angeles and San Francisco crises.
It is quite certain that the lessons being learned in California will be closely watched. The emergency authority allowed Davis to order the California Energy Commission to streamline the application process for new power plants. Most of the industry in the state is centered around the Los Angeles and San Francisco areas. In electric power, we must have openness and companies that are responsible for keeping the lights on. Electric load was redirected on to other lines, which eventually tripped off line due to the higher demand.
Governor Gray Davis declared a state of emergency. These blackouts are rotated in different parts of the grid and often referred to as rolling blackouts. Next, by California's free-market rules, Enron was allowed to price-gouge at will. If these businesses file bankruptcy, they would be among the largest business to fail in U. Electric companies, as well as the ISO, are also beginning to introduce grid modernization technologies into their systems. California regulators disallowed the sale.
Another factor is the incredible growth of the high-tech industry in California. They were unable to pass the higher prices on to consumers without approval from the public utilities commission.