Is the CCA subject to the same energy price fluctuations that undermined investor-owned utility financial stability in 2000?
Due to the restructuring law passed in 1996, the CPUC prevented utilities from entering into long-term purchase contracts because it was assumed that market competition would lower prices. At the time of California’s energy crises, PG&E was caught in a unique situation of having to purchase power from the spot (very short term) market, where prices went very high due to market manipulations, escalating natural gas prices, and other factors. Since the energy crisis of 2000-2001, the CPUC has changed power purchase rules that eliminate many of the risks exposed by California’s experimentation with market restructuring. The CCA legislation was approved in California in 2003 in response to this energy crisis.
