Theobjective of the deregulated power industry in California was toallow producers to sell any quantity of electricity that theavailable traffic could bear. It attempted to deliver cheaper andcleaner energy. Unfortunately, the state was faced with the shortageof electricity that the governor was forced to rethink concerningother means of sourcing electricity (Anderson&amp Fouad, 2008).Theapparent shortage as a result of failed system has proved to behighly lucrative to power firms, which raises a notion of industrymanipulation.

InadequateHydroelectric Power resources

Inthis first dimension, the California Power Administration played amajor role by lowering the quantity of power served to theNorthwester parts of the state. During this moment, the directutility contracts with the organization were planned to expire in2001. The implication was that neither the commission nor theconsumers were sure of the body that would take over theresponsibility of ending the electricity crisis. Eventually,California was in a situation where it has to acquire an additional3,350 megawatts within a short time but with enormously high prices(Anderson&amp Fouad, 2008).

Asa result, the reduced power generation impacted both the Northwestand Southwest California. Average exports from the two sides werereduced by almost 2,710 megawatts in 2001 as opposed to the precedingthree years. The conditions in the California market power elicitedmore consumer good crisis leading to a disturbed economy. Moreover,the gap between supply and demand of power broadened progressivelythrough the subsequent years (Anderson&amp Fouad, 2008).Essentially, the amount that had to be used in case of thederegulation was seen to be nearly enough megawatts for twometropolises.

&quotGaming&quotof the system

Thesecond contributing factor to the failure of the deregulation wasinitiated by Californian politicians. The leading class held thebelief that best way that they could follow to solve the electricityfunding issue was through the addition taxes. In other words, theysaw the need to apply new protocols on taxpayers. However, this was aviewpoint that in the end made the system more complicated andproblematic (Anderson&amp Fouad, 2008).

Onthe contrary, instead of easing the deregulation process, the hikedtaxes made the citizens to spend even more money in the acquisitionof electricity. It was believed that this could continue for a shorttime, but it never ceased. Furthermore, even hospitals and othersensitive services that depended on electricity were drasticallyaffected hence the government had to promptly halt the deregulationprocedures. As a result, the deregulation failed because ofpolitician’s gaming culture (Anderson&amp Fouad, 2008).


Californiastarted suffering a serious shortage of energy by the onset of the2000 summer. The shortage went on until 2001 and during thisduration, brownouts and blackouts became very frequent in severalregions of the state and the adjacent regions. The problems gave theimpression that it started with the deregulation process of theelectrical power industry (Anderson&amp Fouad, 2008).

TheApril summers were typical features during this phase. However, itbecame severe leading to global warming that offset unusual warmweathers. As a result, the event that seemed to be a mere summer,after being associated with the deregulation, led to the revocationof the whole process (Anderson&amp Fouad, 2008).

Upuntil now, advocates of regulatory approaches argue that thechallenges facing California are the outcome of a poordecision-making process. Such debates also focus on whether theCalifornian energy crisis is caused by firms in an attempt toincrease their profits. The FERC has issued a policy proposing thatprice manipulation should not be done by producers without federalinvolvement (Anderson&amp Fouad, 2008).


Anderson,P. M., &amp Fouad, A. A. (2008).&nbspPowersystem control and stability.John Wiley &amp Sons.