Aggravating this year's deregulation woes are rising energy costs. The prices of oil and natural gas, key fuels burned by utilities to generate electricity, are up a lot and expected to stay high. That run-up in energy prices further undermined consumer expectations that a free market for electricity would lower electric rates. All of a sudden, Florida's reluctance to touch deregulation looks almost prescient. At the least, the deregulation mess gives the industry more ammo to preserve the status quo.
Truth is, power deregulation has gotten a bum rap.
The California disaster was nurtured by screw-ups over many years. The capacity of California's utilities to generate electricity had fallen way behind demand. The San Diego test occurred during unusually hot weather in the West. When demand for power increased, extra electricity normally imported from neighboring states was unavailable. The price of what little untapped electric power remained was driven sky-high in a bidding war.