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In 1996, California became the first state in the nation to deregulate its retail electricity market. Known as direct access, deregulation initially was a success with low wholesale prices and more than two hundred electric service providers offering products to consumers. However, the great experiment was not without its setbacks.
Hampered by a shortage of electricity supply, market manipulation and Mother Nature herself, it would seem that direct access was being attacked on all sides.
Heat Wave
Electricity supplies to the state were tight and, as a result, rolling blackouts hit in January 2001 for two straight days. On January 17, 2001, Governor Gray Davis was forced to declare a state of emergency in response to the continued electricity crisis. A later investigation, conducted by the Federal Energy Regulatory Commission, would find that Mother Nature wasn’t entirely at fault. Energy trading companies, such as Enron, contributed to the crisis by illegally restricting their supply to the point where spikes in power usage would artificially cause blackouts.
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Posted: July 15, 2015