There are some planks in this platform that, if he can follow through and lead people with him, will unleash an amazing amount of creative energy and dynamism. From the Governor-Elect’s website, all points follow the statement “as Governor I will”:
Encourage cost-effective conservation by increasing demand response to changing electricity markets. One of Governor Davis’s great errors was his delay in permitting retail prices of electricity to move with wholesale costs. This failure prevented conservation of power during peak hours. These actions cost the state billions of dollars. No market can function without proper prices. Commercial, industrial, and government consumers should be given the right to opt out of these reserve charges if they allow the state to remotely turn off their power when supply is tight. These specific consumers must use hourly meters that permit remote dispatch. This interruptible load can be included as reserve power.
Look at that: no market can function without proper prices, prices that reflect both supply and demand in the transactions. This language is also redolent with references to interruptible load contracts, an easy-to-implement way to activate retail demand, particularly for large customers.
Last fall I summarized the benefits of demand response in this Reason commentary.
Affirm the commitment to private power by dismantling the California Power Authority (CPA) and transferring to other agencies those functions (if any) determined to support a sustainable energy policy. Its current mission to build and operate publicly owned power plants is in direct competition with private industry and serves only to divert private investment in electricity generation and transmission away from the state.
He and his advisors clearly understand crowding out!
Create a working wholesale power market based on the lessons learned from other states and the FERC standard market design. California is one of several states that adopted electricity restructuring. However, only California’s restructuring caused severe price hikes and energy shortages. It is time to learn from other successful restructurings enacted by Texas, the New England states, and the Mid-Atlantic states of Pennsylvania, New Jersey and Maryland. In addition, California should also look to the standard market design created by FERC.
Learn from other states? Gee, I think I’ve seen someone advocate that before! Apologies for the shameless self-promotion, although I’m certainly not the only person who has said that in the past three years.
Restructure the wholesale market. Merge the functions of the CAISO and former PX (transmission operations, generation dispatch, and wholesale trading) into a single entity.
Now, I’m not so crazy about this idea. Yes, the bifurcated pool structure between the PX and the ISO created a lot of pernicious incentives for both utility buyers and generator sellers. But the ISO should house the grid operations and dispatch functions, not wholesale trading (except for a real time spot market for last minute balancing). There are plenty of financial intermediaries that would be happy to help buyers and sellers broker bilateral trades, and requiring parties to trade through the state’s wholesale faux market was one of the causes of California’s problems in 2000-2001. Not having a mandatory pool is one of the lessons that Texas learned from California, and Texas wholesale markets are a lot more healthy, liquid and robust than California’s were.
If the ISO is to have a wholesale trading pool, it must not be mandatory, but instead a spot market for parties who find themselves short or long and looking for a partner.
All in all, quite promising for dynamism, creativity, value creation, and the well-being of California’s residents and businesses.