But at least Loma Prieta was a job creator. This energy crisis is a job destroyer. Borenstein believes the way out of the electricity mess is to quickly raise prices for homes and businesses to a far greater extent than what has been approved to this point by the Public Utilities Commission. That is the only way to avert significant damage to the entire California economy. We have to face reality and not pretend there's an electricity tooth fairy who will take care of us.
People have to face the real price of electricity.
When they do, that will drive down the wholesale price of electricity. Higher prices tend to force people to consume less of a given product or service, which usually drives prices down. Even worse, this is only the start of the energy-related problems, the Federal Reserve Bank study also warned. Other disturbing trends surfaced in a report issued in March by the Reserve Bank. The bank discovered that consumer confidence in the Pacific Coast region that includes California was down sharply through the end of February.