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Electric Competition, One Year Later: Winners and Losers in California

Fortnightly Magazine - March 1 1999

The early forecasts are released during the first week of January; in 1998 they were 20 percent below average. The comparable forecast for 1999 is 10 percent above average flows.

4 One ISO representative caused a hearty round of laughter at a recent energy symposium by noting that the ISO specifically chose to avoid a general blackout during September. Famous economist Thorsten Veblen once remarked wryly that "theories are constraining on the underlying facts." Turning out the lights to validate the ISO's computer programs would have made the ISO's programs very expensive, indeed.

5 Our firm's preliminary statistical results indicate that California's experiment has raised spot prices by 9.26 mills on-peak and 4.82 mills off-peak. This estimate takes into consideration the real world where the demand and supply for electricity are not straight lines. Precise estimates of the terms of trade losses require actual dispatch curves for both regions and reflect a variety of additional issues: hydro-electric availability, fuel cost expectations and operational limitations.

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