sample optional papers - Californias Electricity Crisis | 1...

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California’s Electricity Crisis | 1 California’s Electricity Crisis: How It Came To Be Dong (Doug) S. Park Environmental Economics May 15, 2001 I. Introduction In early summer of 2000, the California electricity crisis began to take center stage. As media attention and coverage spread nationwide, the California electricity crisis began to be followed and scrutinized by the entire nation. Economists, such as Paul Krugman of Princeton University, Public Policy Institutes such as The Cato Institute, and well renown academic centers such as the University of California at Berkeley’s Haas School of Business have all published comprehensive reports and recommendations regarding the crisis. This extensive nationwide concern stems from the alarming situation that Californians face today and the impact that it may have on the entire nation in the future. As the shortage of electricity in the largest micro-economy of the United States has created massive problems on the West Coast, there is little doubt that if left unchecked and unresolved, the ramifications may extend much farther, costing billions upon billions in forgone GDP, taxpayer monies, as well as consumer and producer welfare. This report aims to analyze the causes of the California electricity crisis with policy recommendations for resolution, as set forth in various literature on the matter.
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California’s Electricity Crisis | 2 Section I is the introduction. Section II is a discussion on the California legislative bill AB 1890. It will highlight the major components of the bill that are thought to have given rise to the electricity crisis. The rationales and intended effect of the covered mandates by the proponents of the bill will also be explained. Section III will closely examine the actual role that legislation played in California. The effects on the supply and demand for electricity, as well as the exacerbation of the crisis, will be analyzed. Accordingly, Section IV attempts to provide recommendations for a sensible resolution of the crisis. A caveat follows in that Section IV is opinionated and no longer follows the analytical mold of the previous sections. As the attempt to restructure the electricity industry has been a failure and has resulted in greater regulation than deregulation, the section will provide possible solutions to ease the crisis. Section V will summarize the paper. II. AB 1890: California Restructures The then Governor of California, Pete Wilson, signed the bill AB 1890 in September of 1996. The bill was the culmination of California’s attempt to restructure its electricity market 1 . The new bill was intended to promote competition in the electricity supplier and provider market, thereby increasing social welfare. Through enhanced competition, those proponents of the bill theorized that a more efficient, cost-effective, and welfare maximizing electricity industry would arise. The result would be lower retail and wholesale rates, increased ancillary services, increased consumer options, efficiency
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sample optional papers - Californias Electricity Crisis | 1...

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