The exchange would then assess the power supply with the power demand, set a spot market price for the power and then, in essence, broker the reselling of that power back to the utilities. The ISO was supposed to be a central command station coordinating the scheduling for the delivery of power so that everyone would get the power they needed. In the event that there was not enough power to go around, the ISO was empowered to buy chunks of energy, which would be more expensive than PX power. But that was only supposed to be a last-ditch response. No one envisioned that by the summer of 2000 the Power Exchange would have essentially collapsed, and the ISO would be perpetually buying power at premium prices to keep the lights from going out.
Critics say they're trying to turn out the lights on democracy.
Those costs have been passed on to the utilities that deliver power to California residents. And because the utilities are prohibited by state regulation from passing that cost on to rate payers, the utilities are taking the financial hit. To say that the Power Exchange hasn't worked out is an understatement. Private firms that bought the plants in the utilities' power plant sell-off cut their own deals with other energy consumers and marketers, or even sold their power out of state rather than sell to the Power Exchange. As a result, the spot market in California began to collapse.