Good quick stats on demand

F. What Caused the Electricity Price Increases in California?
The simplistic story of why California,s electricity prices skyrocketed over 
the past year is that demand for electricity had grown equal to, and even 
beyond, the supplies of electricity available in the state. Between 1996 and 
1999, California,s electricity demand grew by 5,500 MW (14 percent), eight 
times the 672 MW (2 percent) increase in electricity generation capacity 
added over the same period. Of course, these numbers do not explain why new 
electricity capacity was not added as demand grew, or why demand did not 
shrink as supplies ran short.
Even detailed studies of the California electricity market oversimplify the 
problem*usually highlighting about a half-dozen factors that influence 
prices. In fact, as Figure 2 shows, a tangled web of factors led to price 
increase. The key lesson of this diagram is that simple solutions are not 
possible*many different facets have to change for prices to return to normal 
levels.
Many of the price influences in Figure 2 (the un-shaded ones) came about due 
to factors in other markets or natural changes in the economy, and there is 
little that policy makers can do to influence them. But many other price 
influences (the shaded ones) are shaped, and even created, by state policy 
decisions, most of them part of the restructuring plan. Policy alternatives 
open-ended enough to accommodate the interconnections between factors and 
resilient enough to accommodate changes in some or all factors may be able to 
bring electricity prices back to more normal levels.