Business/Financial Desk; Section C 
Flaws Cited in California Electricity Market
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10/07/2000 
The New York Times 
Page 4, Column 1 
c. 2000 New York Times Company 
PASADENA, Calif., Oct. 6 -- California's electricity market is not ''workably 
competitive'' and needs to be fixed, the California Power Exchange said in a 
draft report. 
Wholesale power prices from May to July more than quadrupled from a year 
earlier as demand strained supplies during weather that was hotter than 
normal. Some generators appeared to hold back power at times of peak 
consumption, waiting until prices surged. 
This happened because of ''structural flaws in the design of the California 
electricity markets,'' the report said. ''These design flaws need to be 
addressed,'' it said. A final report is expected next week. 
The exchange recommended easing restrictions on building power plants and 
penalizing companies for waiting until the last minute to deliver power. It 
did not cite a specific power-plant owner, marketer or utility as responsible 
for the problem. 
The nonprofit power exchange was created by the state legislature in 1996 to 
operate a marketplace where utilities and other big buyers and sellers could 
get electricity. 
The PG&E Corporation's Pacific Gas and Electric, Edison International's 
Southern California Edison and Sempra Energy's San Diego Gas and Electric buy 
all their power through the exchange. 
Pacific Gas and Electric and Southern California Edison have said they face 
billions of dollars of losses because rates they can charge customers are 
frozen far below the rates they had to pay for power on the exchange this 
summer.