Summer may be over and cooler temperatures may be on the horizon, but that doesn’t mean California’s energy crisis is a thing of the past. Quite the contrary.
An energy shortage still looms for the foreseeable future and it will affect all of us. The question is how should we prepare for the shortages?
When California’s electrical system was deregulated in 1996, there was a 30 percent surplus of power in the Western United States. A combination of a significantly increased demand for power, an inadequate investment in energy generation, and warmer than normal temperatures has eliminated that surplus. The shortages this summer led to higher prices in the competitive market for electricity.
Some have blamed the crisis on the decision to restructure the electric industry to increase competition. This is not the case. In fact, it is the current lack of competition that exacerbates the impact of shortages. The price impact on customers in San Diego would have been much less severe if retail competition had been vigorously promoted and encouraged over the last few years.
How could retail competition have helped San Diegans this summer? Retail electricity sellers are a buffer between wholesale prices and customers. Retailers analyze the wholesale market, create long- and short-term price offerings and stabilize electricity prices for the retail customer.
Most electricity customers in San Diego had no such buffer this summer. Most customers were unaware of the potential high prices, and they were not offered options to protect themselves from these prices.
There are no quick fixes for the supply shortage that created these high prices. There are many new power plants in the siting process, but they won’t be operational right away.
Until supply catches up with demand, the energy crisis must inspire creative programs that help stabilize electricity prices and help businesses like yours manage their energy load.
We are at a critical juncture. Businesses need to take immediate action and seek market-based, long-term energy solutions. What can you do to manage your energy load and get better control of your energy costs right now? The good news is that deregulation gives you choices you’ve never had before.
There isn’t just one solution for all customers; looking at how you use energy, when you use it and where the opportunities are to save energy all are very important. You may consider combining electricity purchases with energy management services.
No matter what solution is best for you, we urge you to take control of your energy future. You will reap the benefits of lower prices and help California develop a truly competitive marketplace.
Nichols is the managing director of New West Energy. Stewart is president of the California Manufacturers and Technology Association.
