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Energy Price Caps Lifted to Avert More Rolling Outages

The state’s power grid system operator moved to lift price
caps for up to a month in an effort to bolster energy supplies and prevent more
heatwave-related blackouts.

While the state agency that maintains the grid says the
emergency move was needed to offset peak demand during an historic heat wave,
ratepayer advocates were quick to denounce it as an overreaction that will
unnecessarily boost bills.

The action by the California Independent System Operator on Monday allows price caps on power to be lifted for up to 30 days. That move came the same day Gov. Gavin Newsom demanded an investigation into what triggered the outages and stressed the need for Californians to conserve. Newsom called the outages “unacceptable and unbefitting” the state.

Ratepayer advocates say lifting price caps won’t solve
anything in the long term. They questioned why the state acted when there
appeared to be enough reserve power available to tap into and meet unexpectedly
high demand.

 “It makes no sense to have a full 30 days with no
price caps,” said Mark Toney, executive director of TURN, The Utility Reform
Network ratepayer advocacy group.

“I’m very concerned raising the price caps will mean that
Wall Street traders will make an enormous profit on the backs of California
ratepayers — and that’s just not right.”

Loretta Lynch, former president of the state’s Public
Utilities Commission, said the whole crisis could have been averted had key
protections borne out of the last energy crisis in 2000 not been allowed to

Those protections had forced power providers to sell all
their available power, preventing them from withholding it to drive up prices
amid urgent demand. The rule quietly lapsed in 2017, she said, leaving the
state vulnerable to providers holding back on supplies until the price is

 “They can sit on the sidelines and wait,” she said,
“until the price goes up enough for them to offer their power.

That means, a key consumer protection that I negotiated back
in 2001 is no longer available to California, and that means that California is
going to pay a whole lot more for energy than we should.”

Just how much more the state will end up paying is not
clear, as the emergency contracts are secret. But the months of apparent price
gouging back in the blackouts of 2000 cost the state’s ratepayers an estimated
$40 billion.

Source: NBC Bay Area

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