This time, released from government regulation, California's utilities not only fought the building of new power plants, they sold off more of their old ones than required and shipped the profits to the safety of corporate holding companies. Big energy users ceased storing backup fuel, believing that the market would supply all. Owners of dirty, inefficient power plants abandoned plans to install cleaner, more efficient turbines, promising instead that they would run the plants only a few hours a day. Once again the public was left to write the check. But the idea that unsupervised markets can guarantee reliable supplies of essential commodities is simply wrong.
Markets attract gamblers.
That's fine if the commodity is dot-coms or Yen futures, but if they're gambling with our power supply or our environment, we need to protect ourselves. Markets have no reason to hedge against bad times, reckless decisions, or the unexpected-which always happens. As I was writing this column, on a night flight from Detroit to San Francisco, I looked down as we passed over Sacramento. Suddenly, a vast swath of the orange grid of light below vanished into blackness. The magic of the marketplace had struck again.