California Power Surplus City

Abridged Story

From a news story by
CNN San Francisco Reporter Don Knapp

January 11, 2001

California is facing an energy crisis. The big utility companies are almost out of money. Because of deregulation, the price of electricity is 20 to 30 times more than before. If the big companies can’t afford to buy electricity, the lights may start to go out in California.

The story is different for some smaller city-owned electrical companies. They were not affected by deregulation. Redding, in Northern California, makes most of its own electricity. It has long-term deals to buy electricity at a low price. Redding has made 18 million dollars selling electricity to the big power companies. People in Redding may see their power rates go down in the future.

Eighty years ago, city leaders in Redding started making electricity. The people who live there are very grateful to those early city leaders.

Additional Notes:

California deregulated its power industry in 1997 (see note below about deregulation). In many parts of California, wholesale rates for buying electricity have gone up 20 to 30 times higher than before.

Municipal (city-owned) power utilities were not affected by deregulation. This has kept the price low in Redding. Even cities like Redding could run short of energy if they are forced to sell their electricity to the big companies.

Deregulation is the process of removing regulations from a company or group of related businesses. It results in a change from a situation where regulations controlled prices and actions of a particular group. For example, airlines were "deregulated" in the United States, resulting in great changes in prices, routes, and procedures. The idea is that deregulation leads to greater competition, with resulting lower prices. That doesn’t always happen in real-life, as we have seen.

Last Minute Developments: On January 17, 2001, California suffered its first major blackout. Blackouts have continued. On January 19, 2001, the California governor authorized the state to buy electricity and sell it to the utility companies at a low price. No one knows what will happen next.

Related Stories:

• CNN Special Report – Power Crisis: Many different articles provide information about the power crisis
  
  
• Deregulation of Power Sends Prices Skyward: Learning Resources story from August 5, 2000
  
  
• Energy Regulation Debate: Learning Resources story from January 3, 2001

Related Sites:

• The Redding Public Utility Commission: A good history of Redding’s electrical development .
  
  
• The Energy Story from the California Energy Commission: This site gives an excellent overview of the various types of energy used in California and other parts of the developed world. The California Energy Commission is the state's primary energy policy and planning agency. Its Energy Quest website has won numerous educational awards.

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