In each case, we carefully studied available supplies in the region, our estimate of future marketplace prices, the likelihood of success in siting and constructing a facility and a host of other factors. As I speak here today, we are developing power plants in Connecticut, on Long Island, in Pennsylvania, in Washington state and in Arizona. Caps These new supplies, however, will be put at risk if we begin to artificially manipulate the wholesale markets. Caps are designed to clip the peaks of price movement in the market, with the goal of thereby reducing average prices. The California experience itself has shown that price caps tend to encourage higher average prices, which could actually lead to an increase in costs to consumers.
Caps also can result in a transfer of capacity to higher value markets.
That will surely happen in the West, as resources seek higher-priced markets elsewhere or even, in certain circumstances, shut down if they cannot achieve sufficient revenues for operation. Second, the caps signal developers to go elsewhere. Developers of generation look for the best returns they can find, on a risk-weighted basis. They are not limited to California, the Western United States or even the United States as a whole. Putting a cap in place will send a strong signal to developers that the western United States is coming more and more under price controls and government interference.