California Power Crisis

Between May 2000 and January 2001, the recently deregulated electricity market in the state of California experienced what many commentators have characterized as a meltdown. Over that period wholesale electricity prices increased over 500 percent, power emergencies and the threat of rolling blackouts became daily occurrences, and the state's largest investor-owned utility was thrust into bankruptcy. This case details California's attempt to deregulate its wholesale and retail electricity markets and gives students the opportunity to diagnose the causes of California's crisis. The case contains data that enables students to identify the drivers of increases in the wholesale price of electricity in California.