Despite some modest successes in restructuring, as in Pennsylvania, the California crisis has had a larger impact on policy makers. Because of restructurings failure in the Golden State, legislators and regulators in seven states delayed implementing their own restructuring plans. Further complicating matters were revelations that Enron, the largest power marketer in California and elsewhere, had hidden a huge amount of debt from its books. The high-flying company, whose stock price soared above $80 per share in the fall of 2000, as the California crisis intensified, had also allegedly pursued trading practices that artificially elevated the wholesale prices of power.
After Enron fell from grace (and into bankruptcy in December 2001), observers and policy makers worried that free markets for power in their states might be similarly affected by unscrupulous marketing companies. In such cases, the benefits of restructuring would never flow to customers, the intended beneficiaries. With the California crisis and the Enron scandals prominent on their minds, policy makers lost much of their ardor for restructuring, as is reflected in the following map.
Restructuring Status as of March 2002
Source: U.S. Department of Energy, Energy Information Administration, at http://www.eia.doe.gov/cneaf/electricity/chg_str/regmap.html. (Image text retyped for clarity.)
State and federal regulators will need to monitor the marketplace better and ensure that generating companies do not have too much market power or withhold power from the grid when demand increases. Regulators may also need to guarantee that power brokers do not trade unfairly in ways that enrich themselves at the expense of customers. Finally, they may need to create more effective power pools (so-called regional transmission organizations, similar to the PJM interconnection system) that allow for more efficient trading of power over large areas. In these ways, observers argue, the benefits of competition can still accrue to customers, despite some rocky experiences during the first years of restructuring.