Prices on the wholesale market for the California/Oregon Border, which covers
Northern California, remained very stable up until the summer of 2000. They
went up that summer, following the pattern in other markets when prices spiked due to high demand. However, in contrast to other regions,
prices for the California/Oregon border never came back down. Instead, they have continued to soar, hovering over 10 times the rates from a couple years before.
As of March 1998, California's 3 investor-owned utilities (IOUs) could
competitively select their wholesale power supplier. This change didn't affect
customers much -- retail customers have price caps and residential and commercial customers get a 10 percent rate reduction. But that caused a problem for the IOUs because they were paying market prices for power, and not making more money than they previously were. Ultimately, this is one of the reasons why Pacific Gas & Electric went bankrupt this past winter. In January 2001, the California Public Utilities Commission issued an order to provide rate relief for Southern California Edison and Pacific Gas & Electric and allowed them to pass on some of their costs to ratepayers. The result for California electricity customers is that prices are going to increase by over 40 percent in the coming months.
For this Berkeley, Calif., customer, electricity prices remained fairly stable over the past year. In October 2000, he spent $111.37 on electricity, and then in January 2001, he spent $116.44. Electricity prices in northern California
have remained fairly stable because of price caps. Gas prices, however, have
gone up drastically due to natural gas shortages. This customer's gas bill
went from $49.20 to $385.94 in one year -- that's a 700 percent increase.
Electricity prices in northern California won't continue to be stable -- Governor Davis has approved an increase of about 40 percent for all California customers over the next few months.
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