What happened to the electric industry in California?
Under deregulation, the state's investor-owned utilities (IOUs), including Southern California Edison (SCE), Pacific Gas and Electric (PG&E), and San Diego Gas and Electric (SDG&E), agreed to sell most of their power generating facilities and instead purchase their power from a daily wholesale market. The theory was that this would increase competition and prices would fall, thereby ultimately benefiting consumers. Instead, those prices rose significantly. Why? Over the last 10 years, environmental constraints as well as the potential risk that investors might no longer be able to recoup long-term investment in power generation resources, resulted in fewer power facilities being built.

Therefore, demand for electricity began to outpace supply. Natural gas prices and emissions costs also skyrocketed. All of these factors, combined with what we now know was market manipulation, created very high prices in the wholesale energy markets. The increase in wholesale prices caused the state's IOUs to pay more to buy wholesale energy than they were allowed to recover from their ratepayers, creating a "collection gap."

Show All Answers

1. What is Anaheim doing to prepare for the possibility of energy shortages?
2. What happened to the electric industry in California?
3. What about Anaheim's electric rates?
4. Why did other utilities raise their rates?
5. How is Anaheim different from the IOUs?
6. What is a Stage 3 Electrical Emergency?
7. What is a rotating outage?
8. What if a statewide electrical emergency continues?
9. Is Anaheim subject to rotating outages?
10. Are there any areas that are exempt from rotating outages?
11. Doesn't Anaheim generate its own electricity?
12. Why does Anaheim have to participate in the rotating outages?
13. What is Anaheim doing to avoid rotating outages?
14. How can I help prevent rotating outages?
15. Where can I obtain more information?