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Questioning the Conventional Wisdom

16 Pages Posted: 7 Dec 2001  

Tim Brennan

University of Maryland, Baltimore County - Department of Public Policy; Resources for the Future


There is little dispute that the California energy crisis began with demand severely outstripping supply in the western United States in the summer of 2000. But tellers of the California tale have embellished that story with a number of additional claims, such as the following:

- The state should have deregulated more broadly.

- Generators "gamed" the California wholesale-retail auction.

- The lack of real-time or other market-based pricing removed consumers' incentive to conserve.

- Long-term contracts would have insured against high wholesale prices.

- Generators used market power to further drive up prices.

- Temporary price caps would have lessened the crisis significantly.

- But for California's mistakes, electricity markets will work. Those assertions may have some merit. But, the author argues, that merit is not without qualification.

Suggested Citation

Brennan, Tim, Questioning the Conventional Wisdom. Regulation, Vol. 24, No. 3, Fall 2001. Available at SSRN: or

Tim Brennan (Contact Author)

University of Maryland, Baltimore County - Department of Public Policy ( email )

1000 Hilltop Circle
Baltimore, MD 21250
United States
410-455-3229 (Phone)
410-455-1172 (Fax)

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

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