Last Updated:
19 May 2019

The California Power Crisis

Lessons for Developing Countries Author: John Besant-Jones and Bernard Tenenbaum

Over the past 15 years, more than 30 countries or regions within countries have initiated major reforms of their power sectors. Typically, the reforms involve some combination of restructuring, privatization, and competition. While the reforms are almost always intensely debated by power sector officials, they rarely receive much attention outside the power sector. But this has changed with the skyrocketing prices, blackouts, utility bankruptcies, and potential ‘deprivatization’ that have accompanied the collapse of California’s reform program. Clearly, what happened in California was not what was planned. Governance of the transmission system and market operators should be kept independent of market participants, and it should not be susceptible to deadlock. In any organization, governance refers to what decisions are made, who makes them, how decisions are enforced, and how disputes are resolved. In a competitive power system, the transmission system and market operators must be able to make decisions independently of market participants to ensure equal, nondiscriminatory access to the high-voltage grid and the marketplace.



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