Letters to the Editor
David Moore, Deputy Assistant Director, Microeconomic and Financial Studies Division, Congressional Budget Office, U.S. Congress. Chris S. King, Executive Director, American Energy Institute
Dear Editor:
Chris King’s article, “How Competitive Metering Has Failed,” (Nov. 15, 2001) states that the Congressional Budget Office’s report, Causes and Lessons of the California Electricity Crisis (September 2001), found that advanced metering and improved price signals could have prevented California’s energy crisis and averted rolling blackouts. Mr. King overstates both the weight the CBO report places on the demand side of the electricity market and the importance it assigns to advanced metering therein.
The report certainly does indicate that freezing the price of electricity to retail customers was a significant factor in California's crisis, but it emphasizes that many factors on both the supply and demand sides of the market came together to cause the state's problem. In discussing the lessons of California's electricity problems, the report notes that prices that accurately reflect costs are necessary for markets to function well, and that the broader use of real time metering and contractual agreements that permit service interruptions when prices rise are options worthy of consideration. The report, however, does not make the grander claim indicated by Mr. King that advance metering would have prevented the crisis and averted black outs.
David Moore
Deputy Assistant Director, Microeconomic and Financial Studies Division
Congressional Budget Office, U.S. Congress
Dear Editor:
While Mr. Moore and I seem to disagree on the semantics, it appears that we are in violent agreement on the big picture, as stated in the CBO report (emphasis added):