| In 1996 the California legislature passed AB 1890, explicitly defining economic benefits and detailing specific mechanisms for initiating a partial restructuring the state's electric system. Critics have since sought re-regulation and proponents have asked for patience as the new institutions and markets take shape. Other states' electric system restructuring activities have been tempered by real and perceived problems in the California model. This study examines the reduced regulatory controls and new constraints introduced in California's limited restructuring model using utility and regulatory agency records from the 1990's to investigate effects of new institutions and practices on system reliability for the state's five largest public and private utilities.; Logit and negative binomial regressions indicate negative impact from the California model of restructuring on system reliability as measured by customer interruptions. Time series analysis of outage data could not predict the wholesale power market collapse and the subsequent rolling blackouts in early 2001; inclusion of near-outage reliability disturbances---load shedding and energy emergencies---provided a measure of forewarning. Analysis of system disruptions, generation capacity and demand, and the role of purchased power challenge conventional wisdom on the causality of Californian's power problems. The quantitative analysis was supplemented by a targeted survey of electric system restructuring participants.; Findings suggest each utility and the organization controlling the state's electric grid provided protection from power outages comparable to pre-restructuring operations through 2000; however, this reliability has come at an inflated cost, resulting in reduced system purchases and decreased marginal protection. The historic margin of operating safety has fully eroded, increasing mandatory load shedding and emergency declarations for voluntary and mandatory conservation. Proposed remedies focused on state-funded contracts and government-managed power authorities may not help, as the findings suggest pricing models, market uncertainty, interjurisdictional conflict and an inability to respond to market perturbations are more significant contributors to reduced regional generation availability than the particular contract mechanisms and funding sources used for power purchases. |
