You know, even though Enron's own lawyer admitted today that they were playing naughty in California some people still won't accept reality.
One of my commenters claims that California had a capacity problem due to low rainfall. This is just wrong. It is true that there were concerns about low water levels for the following summer - when there would be peak demand - the "crisis" had ended by then. In any case, if the power magically appeared every time California was willing to write the check there couldn't have been a lack of capacity. It wasn't because power companies were hooking up their stationary bicycle generators.
He then argues that price caps would have shifted the problem to other states because California would have taken "their" power. I really don't understand how price caps in California would cause power companies to become more willing to sell power to them than to other states. This makes no sense.
You can say California had a bad system (it did). You can argue that "true" deregulation would be wonderful (it wouldn't be, but that's a separate argument). But at that time, price caps would have solved all of the problems. Not price caps forever, but price caps until the system could be fixed.
