Instead, it broke up a previously vertically integrated industry and failed to allow the resulting units to hedge their new risk in financial markets. Anti-market environmentalists deserve much of the blame. This is a profoundly confused notion. But it holds a couple of lessons. There is real deregulation and there is faux deregulation.
Real deregulation means allowing market forces to work.
California didn't really trust the market to work. . . . Electricity is different from natural gas in that it can't be stored and drawn down when needed. If you're contemplating deregulation, you had better be sure there is ample production capacity. California embarked on its experiment in 1996, apparently without considering the supply side. No new power plants have been built in that state in a decade.