Deregulation Problems Unique to California, Association Says

The Executive Committee of the National Energy Marketers Association met in San Diego to respond to the California energy crisis and prioritize the issues facing the industry. Energy and technology experts from all regions of the country reviewed the crisis and concluded that the problem is isolated primarily to California.

The factors that converged to create the California energy crisis are unique to California, and will not likely be replicated in other regions of the country, says Craig Goodman, president of the National Energy Marketers Association.

Goodman also notes that construction of new energy supplies in California is not keeping up with the demand in other states, and this could hurt consumers and local economies elsewhere.

The California deregulation disaster has shown that prices will not remain stable or decline without construction of new generation, Goodman says. Also, consumers must be able to respond to correct price signals in order to conserve energy, he notes.

The short-term supply shortages and price spikes are the price that the state must pay as long as price signals are distorted and new energy supplies are not available, says Goodman.

"Deregulation works,” Goodman says. “Prices in other deregulated industries have declined dramatically. However, California-style deregulation will never work. The laws of economics do not permit prices to remain stable while demand explodes and construction of new supplies is blocked. In order for energy deregulation to work, regulators must ensure that new supplies are available to meet the growth of local, state and regional economies."