For comparison's sake, the combined debt of those two utilities alone is twice the value of the infamous Supply System bond default when adjusted for inflation. The California debt was amassed over a matter of months and still is building. This is a serious policy faux pas. The state agency California established to run its market and another that operates its transmission grid are being widely criticized. The California Power Exchange serves as the state's computerized trading floor, where most transactions are made.
Sellers tell the agency how much power they'd like to sell the next day and at what price.
The sellers offering the lowest prices are accepted first until there is enough supply to meet demand. The highest price accepted then becomes the market price for the day, which is paid on all accepted offers. But Mike Warwick, who advises governments on energy issues for the Battelle Memorial Institute, said power marketers realized they could jack up prices if they withheld some of their available power. When there wasn't enough energy bid in to meet demand, the marketing arm, known as Cal PX, would alert the California Independent System Operator, the agency that runs the transmission system. Without enough electricity, the Cal ISO would declare an emergency and effectively abolish price caps so more power would be bid just to keep the system from collapsing.