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California deregulation ready again

As of mid March, deregulation of California's $23 billion electricity market was still set to start on March 31. In a long awaited statement, top officials of the state's Independent System Operator (ISO) -- which oversees the grid -- and the Power Exchange (PX) -- which oversees pricing -- announced on March 16 that they expected to be ready at the end of the month for the four year transition to a deregulated electricity market. Even so, not everything in California will be up and running this month. Some aspects of the agencies' new functions will be delayed beyond the end of March. For example, hourly trading, whereby a new price for electricity is set hourly, will not be possible until approximately mid May. Moreover, ISO officials say they encounter computer bugs when a flood of orders congests the system. They are also concerned about "gaming" whereby market players can manipulate the system in unanticipated ways. The delay of the launch, originally set for January, was announced at the end of December and was blamed on computer glitches. It sent power providers -- especially small market starters with no income until they can sell electricity -- -and consumers into last minute confusion. Estimates vary as to how much the delay might have cost so far, but some have predicted the bill for the delay might run as high as $45 million, an amount that will eventually be borne by consumers.

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