Authors: Paul Joskow
Center for Business and Government, John F. Kennedy School of Government
This paper discusses the political, regulatory and economic factors that led to California's electricity crisis. It begins with a discussion of the origins of California's electricity restructuring programs. It then discusses the structure of the wholesale and retail markets and associated transition institutions created in 1996-98 and the performance of these institutions during their first two years of operation. The discussion of the electricity crisis is then conveniently broken down into four phases: (a) May 2000 through September 2000, (b) October 2000 through December 2000, (c) January 2001 to mid-June 2001, and (d) mid-June 2001 through September 2001. Each phase is discussed in turn. The paper concludes with a discussion of lessons about electricity market liberalization gained from the recent experience in California.
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