California ISO agrees to lower prices for electricity : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

ISO agrees to lower prices for electricity By Carrie Peyton Bee Staff Writer (Published Aug. 2, 2000)

Under increasing pressure from angry politicians and angrier ratepayers, the not-for-profit agency that oversees electric transmission statewide lowered wholesale price caps Tuesday. The 15-6 decision by the board of the state Independent System Operator came as debate continued over whether California's electric-industry restructuring has failed or merely hit a series of snags.

The ISO lowered caps on several categories of wholesale power from $500 to $250 per megawatt hour, effective next week.

The decision could lower electric bills in San Diego, the first region in the state to bear the full brunt of wholesale price swings. It could also reduce costs for SMUD, which has been struggling to make ends meet in the wake the prices.

The ISO had refused twice before to drop price caps below $500, after urging from lawmakers in both major parties.

It changed its stance after a call from Gov. Gray Davis and the continued outrage in San Diego, where household bills have doubled and are expected to head higher.

San Diego businesses have laid off workers, and everything from schools to fast-food outlets are reeling from costs as much as 200 percent higher than last year.

"If you don't do the right thing . . . San Diegans are not going to pay their bill" to San Diego Gas and Electric, state Sen. Steve Peace told ISO members. "You need to formally recognize that the market is dysfunctional."

One consumer representative on the ISO board, Mike Florio, said evidence was becoming "definitive" that new owners of power plants were deliberately withholding supply, which drives up prices. But plant owners said that San Diego bungled its power purchases and that utilities' buying policies and limited supplies are largely to blame.

Others warned that the new cap will make rolling power failures likelier during heat waves.

-- Martin Thompson (, August 02, 2000

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