Could Deregulation in California Create a New Energy Crisis?

I am not sure if this is a cry wolf scenario or not, but according to California PUC President Michael Picker, further deregulation / diversification of the state’s electricity industry could result in energy shortages.  He claims that as much as 25% of the state’s electric consumers could be sourcing their electricity from non-utility providers by the end of 2018.

Why Deregulation Could Cause a Crisis

Picker’s argument is that the defection of customers away from their utility makes it difficult to ensure adequate supply.  For example, utility companies in the state might be reluctant to sign long term supply agreements with generation entities due to the uncertain level of future demand. Additionally, natural gas fired plant operators will see shrinking margins, which could ultimately lead to a shuttering of unprofitable plants, reducing overall available supply.

Although Picker’s opinion seems somewhat speculative, there is one element of his narrative that really strikes home – there is no plan in place for the possibility of Picker’s predictions coming true.  California should at least entertain the notion of developing a mitigation plan – a Plan B if you will – that could be implemented if the predictions come true.

Unfortunately, whether you agree with Picker’s dire predictions or not, the state has turned a blind eye to the possibility.  California’s electric market went bonkers in 2000 when deregulation in the state first took effect, yet it seems like state regulators are willing to roll the dice again.  Memories fade fast, I suppose.

I sincerely hope, for the sake of all my emergency preparedness brethren in California, that Picker’s deregulation predictions do not come true, because with no contingency plan in place, you can bet that if they do come true, chaos will quickly ensue.