We hear a lot of discussion about deregulation not working in California and other western states – why isn deregulation working?
Everyone believed that deregulating the electric industry would create a competative marketplace and result in lower electric prices. However, in order to have effective competition you need: 1. Adequate product supply – (electrical generating units) 2. A means to get the product to market – (tansmission lines) 3. A customer base. Unfortunately, the electricity industry only has one of the three elements that make for effective competition. In many parts of the country, including California and New York, there is not enough generation capacity to meet existing electrical demands. In addition, in many parts of the country there are limited transmission lines to carry energy to other places. This means that even when the energy is available it cannot be delivered to various parts of the country. For example, there are only two transmission lines connecting Long Island to the rest of New York State. These lines have a capacity ofapproximately 1200 megawatts. Long Island had a 4800 megawat
