So, for example, rather than having one company control the grid and coordinating generation, transmission, and distribution to ensure reliable, inexpensive service, we have many deregulated companies playing the spot market and maximizing profits by discombobulating supply. The second ingredient in this fiasco is replacing a fixed return with unbridled profits. An essential service for which there are no readily available substitutes at low cost is extremely vulnerable to price gouging because the consumer has no real choice, no alternative. In fact, in the absence of regulation, the cartel has no choice either because they must collude to survive. If there was competition, then rate wars, price discrimination, political corruption, and bankruptcies would necessarily follow, a repeat of the 1880s through the early 1900s.
Competition is too risky a venture in such capital-intensive industries, with high fixed costs.
We have cartels controlling fossil fuel markets and power supply. This will be the situation until the cartels are broken by a deep recession, or re-regulation, or public power. I want to impress upon you the fact that public power is a much more realistic response to the current crisis than the bailouts and payoffs that Governor Davis seems to be effecting. We could then establish a Public Power Authority run by Commissioners who are elected rather than appointed. According to the California Independent System Operator, California Energy Comission, and the article in last Sunday's SF Chronicle, California has sufficient generation capacity to meet existing demand, we have done so in the recent past.