It's no secret that Californians like happy endings. Just look at most Hollywood movies, which like to tie up the story's loose ends in less than two hours (usually). But in its recent efforts to tie up the loose ends left from the California Crisis, is the state setting itself up for a sequel, California Crisis II: A Not So Beautiful Market.
Like all sequels, this one may include a new cast of characters, in addition to some of the old. GOP gubernatorial candidate and former Los Angeles mayor Richard Riordan, while supporting federal price caps, believes in direct access, deregulation, renegotiation of long-term contracts, and the abolishment of California's new power authority. Businessman Bill Simon supports direct access, opposes federal price caps, believes California got electric competition wrong, and wants to abolish the power authority. Secretary of State Bill Jones is pretty much in line with Mr. Simon, and we all know where Gov. Gray Davis falls on the issues-he wants greater state involvement in markets. It's amazing that these candidates can voice a pro-competition position without pies being thrown, and after the billions the state spent on the Crisis.
While it may look hopeful that a competitive market will emerge from California after all, it doesn't seem reassuring that new organizations are being proposed that may not have experience in running or managing markets.
On the regulatory side, there is a proposal to consolidate duties carried out by the California Public Utilities Commission, Energy Commission, Department of Conservation and the energy division of the California Department of Water Resources. While consolidation is good, will what is put in its place be better?
Furthermore, on the market side, the California ISO has issued a proposed market redesign, that recommends, of all things, a power exchange to be encouraged or set up to manage a day-ahead market. I know PhDs who still have nightmares over the Cal-PX. Let's hope they do better the second time. In any case, whatever the sequel to the Crisis will be-a happy ending, a thriller-it's guaranteed to keep the industry on the edge of their seats.