In 2001, California's electric sector deregulation exploded, and with it the state economy and the state political structure. The Governor of California, just recently reelected was recalled by the population, and replaced with Arnold Schwarzenegger. While the physical manifestations of this crisis received media attention, there was a major legal subtext that is still playing out in the courts and will continue for a decade. With the pivotal role that electric power plays in modern American life, and the key transitional role of the legal and regulatory system in transitioning states to a restructured and less regulated format, there are lessons drawn on how to manage an electric crisis. The article particularly examines a regulatory tool that California had available, but couldn't find the levers to activate in time, that would have significantly mitigated or perhaps eliminated the crisis. For other states that may face similar power shortages in the future, the article offers a primer on the legal and regulatory mechanisms to avoid these emergencies.
Ferrey, Steven, Soft Paths, Hard Choices: Environmental Lessons in the Aftermath of California's Electric Deregulation Debacle. Virginia Environmental Law Journal, Vol. 23, p. 251, 2004. Available at SSRN: http://ssrn.com/abstract=980341