However, power producers under deregulation have strong incentives not to run plants at full capacity or to shut them down altogether to manipulate prices. Even so, since April 1999, the state's Energy Commission has approved nine major new power plant projects, six of which are under construction. The purpose of deregulation was to lower costs for consumers. To the contrary, deregulation has resulted in higher prices for consumers. Even if long-term contracts are entered into with suppliers, as is being discussed by state officials, consumers will still be paying an average of three times more for the price of electricity than they would have under sensible regulation.
Deregulation is good for the environment.
Market forces driving deregulation will only encourage cost-cutting measures that will result in more pollution. Suppliers want to continue operating these older plants as long as possible, because it costs less than building new, more efficient plants. Deregulation thus provides no incentive for conservation, which produces no profits for power producers. California's energy crisis is best resolved through state, not federal, actions. To remedy this situation requires federal action.