Energy Crisis Impacts on the Economy: Changes since 2001

While much has changed since the California Energy crisis in 2001, much hasn't.

On the plus side, the market system in place now prevents price-spikes on days like those we've had recently when demand is abutting the available supply:

Spot market power was selling for roughly $70 a megawatt-hour through much of California - a little more than usual, but a bargain compared with much of 2000 and 2001, when prices were $300 or more and occasionally topped $1,000. Utility officials say the state was burning through $1 billion a week at times.

However, these benefits are thanks in part to broader policies which could negatively impact the State's economy. In order to conserve power and prevent blackouts, many companies will be required to cut back on their own consumption:

"...businesses and others on the voluntary power-reduction plan expect they'll have to pull the plug at least once more this summer, said Terry Rich, executive vice president of Ancillary Services Coalition, which helps companies manage their power-interruption plans.

"But everybody is sitting out there with their fingers crossed," he said, "hoping they don't get called."

Shutting down business operations probably has a greater impact on the economy and a business than the savings they realize from being on the voluntary power-reduction program, yet when many business owners entered the system, rolling blackouts were not in the California lexicon.