>
> > -----Original Message-----
> > Electricity Daily
> >
> > March 2, 2001
> >
> > Fessler Fesses Up to What Went Wrong in California
> > Breaking a lengthy refusal to comment publicly on the California
> > electricity "Perfect Storm," Dan Fessler (chairman and a member of the
> > California Public Utilities Commission from 1991 to December 1996)
> > described to a recent conference in New York why things have gone so awry
> > in the state and what he thinks might now be done.
> > His explanation of why the crisis arose is fairly conventional: a shortage
> > of generation capacity; grossly erroneous predictions of the timing and
> > strength of the economic recovery in the state; and a fatal decision to
> > separate the California Power Exchange from the California Independent
> > System Operator. That's a policy to which Fessler (now with the meaty
> > LeBouef, Lamb law firm) believes that the PUC should never have agreed.
> > "Little did I realize," he told the meeting, "that the market design to
> > which the commission and legislature had acceded would turn out to bear a
> > striking resemblance to the battle cruiser, that ill-fated darling of
> > virtually every naval power in the period 1910-1914. At Jutland, it was
> > belatedly discovered that these vessels-imbued with attributes of speed
> > and weaponry that made them so appealing on paper-could not take a punch.
> > Their armor was too thin: a fatal design flaw revealed only when they were
> > tested in battle."
> > So what do we do now? Fessler suggests "a technique which I advocated in
> > 1996 and which remains available for deployment next week. If successfully
> > implemented, my suggestion would directly assail the vehicle of high
> > prices by enlisting self-interested opportunistic behavior to make the
> > demand curve elastic for the first time in the power crisis.
> > "I propose that California pay large users to get off the system the
> > moment reserves approach Stage One conditions. Demand bidding would
> > replace interruptible tariffs for the simple reason that [the latter] have
> > not worked."
> >