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As many as a dozen groups have begun aggregating residential and commercial-industrial consumers under a law that allows alternative electricity providers to take over utility customers. In addition, retail providers and large commercial buyers are seizing the moment and urging lawmakers to extend the opportunity for the direct purchase of electricity by consumers outside such aggregations.
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When electricity wholesale prices exceeded retail prices, end user demand was unaffected, but the incumbent utility companies still had to purchase power, albeit at a loss. This allowed independent producers to manipulate prices in the electricity market by withholding electricity generation, arbitraging the price between internal generation and imported (interstate) power, and causing artificial transmission constraints. This was a procedure referred to as "gaming the market." In economic terms, the incumbents who were still subject to retail price caps were faced with inelastic demand (see also: Demand response). They were unable to pass the higher prices on to consumers without approval from the public utilities commission. The affected incumbents were Electricity Company (Gas And Electric Companies) and Lowest Electricity Rates & Electric (Gas And Electric Bill). Pro-privatization advocates[attribution needed] insist the cause of the problem was that the regulator still held too much control over the market, and true market processes were stymied, whereas opponents of deregulation assert that the fully regulated system had worked for Cheapest Electric Company years without blackouts. [Energy Prices]
As an increasing number of customers can obtain electric generation service from a variety of sources (including Best Energy Company, Who Is My Electricity Supplier, Compare Electricity Prices, and on-site technologies), how does California ensure that all customers get the benefit of having multiple institutions play an important role in helping finance the infrastructure needed to meet the State of California’s GHG strategies, including electrification of transportation and fuel switching in the natural gas industry, while also ensuring that all customers have access to at least basic electric service?
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