Energy securityWhat’s Ailing California’s Electric System?

By Cheryl A. Lafleur

Published 8 September 2020

California made headlines for all the wrong reasons recently with widespread rolling power outages in the middle of a heat wave and a pandemic. These blackouts were not an accident—they were intentionally scheduled by the grid operator, the California Independent System Operator (CAISO), due to a shortage of resources available to keep the lights on.

California made headlines for all the wrong reasons recently with widespread rolling power outages in the middle of a heat wave and a pandemic. These blackouts were not an accident—they were intentionally scheduled by the grid operator, the California Independent System Operator (CAISO), due to a shortage of resources available to keep the lights on.

The California blackouts led to a frenzy of hot takes and finger-pointing based on instant diagnoses of the problems. The situation is like a Rorschach test on which people superimpose their preconceptions about energy. Opponents of renewable energy, including President Donald Trump, blame the outages on California’s use of solar and wind to decarbonize their power supply. Others have jumped to the conclusion that this must be a recurrence of Enron-type market manipulation as in the 2001 energy crisis. Still others have offered silver bullets based on whatever they are selling.

It is important to diagnose the problem correctly so that we don’t administer the wrong medicine. While a full examination should be done, some causes can preliminarily be ruled out. There is no evidence so far that market manipulation was afoot. There is also no evidence that California’s solar and wind generation did not perform as designed. Wholesale markets in other regions of the country are delivering increasing amounts of renewable energy and keeping the lights on.

I think California has four “preexisting conditions” that need to be addressed to avoid this happening again.

1. Lack of Clear Accountability for Having the Resources to Keep the Lights on.
In some regions of the country, electric distribution companies directly invest in power plants under the supervision of state regulators. In others, regional markets use an auction system to buy enough resources to keep the lights on. I personally prefer market structures, but either system can work if it is clear who has the responsibility.

In California, the roles of the CAISO and the state regulators to keep the lights on are quite tangled. CAISO has the job of dispatching power plants but has little authority to ensure they get built. Lining up enough resources is largely under the supervision of state regulators. In other words, the buck stops nowhere. This should be remedied through the actions of the California legislature and the Federal Energy Regulatory Commission, which regulates CAISO.