Powerless In California

Paul Krugman: "When the E.P.A. makes our air dirtier, or the Interior Department opens a wilderness to mining companies, or the Labor Department strips workers of some more rights, the announcement always comes late on Friday — when the news is most likely to be ignored on TV and nearly ignored by major newspapers. Last Friday the Federal Energy Regulatory Commission, known as FERC, announced settlements with energy companies accused of manipulating markets during the California energy crisis. Why on Friday? Because the settlements were a joke: the companies got away with only token payments. It was yet another demonstration of how electricity deregulation has gone wrong... The average Californian was bilked of more than $250, but the state will receive compensation of about 3 cents... Though investigators have found a few smoking guns — control room tapes, e-mail, memos — a power shutdown designed to increase prices is usually indistinguishable from a shutdown for genuine technical reasons... There is a theoretical case for a deregulated electricity market. But making such a market work, it's now clear, requires at least three preconditions. First, it requires a robust transmission system, yet the recent blackout made it clear that we have now created a system in which nobody has clear responsibility for the transmission network. Second, it needs a watchdog agency with adequate powers to prevent and punish price manipulation; FERC doesn't have those powers. Third, that watchdog must not be an agent of the very companies it's supposed to be policing. Enough said."