I have dealings with a power plant that is a so-called "peaker". It generally runs twice a day, for a few hours in the morning, and then again in the evening, this according to the contract they have with the local power company. The rest of the time, it is down. During the Enron days, they would continue running during their off-hours, selling power through Enron to whomever.
Now that Enron is out of the picture, they no longer have the same contacts to sell their spare capacity, and are back to running about half the time. They expect to rectify that soon.
Brokers play a very important role in connecting companies that have spare capacity, with companies that need that spare power.
Power plants produce power under contract. When they must go down to do maintenance, they often must themselves purchase replacement power. This they do through brokers, who purchase the spare capacity from other plants. Replacement power usually goes at a very high price, but since it is usually only for a few hours, or days at worst, it doesn't matter in the grand scheme of things.
California, in her incompetence, has discouraged power plant construction over the past, what, twenty years? Not surprisingly, she is in a bind, and has been forced to buy major amounts of power at "replacement power" prices. Obviously Californians don't want to admit that they are fools, nor are their elected officials and beaurocrats willing to own up to their culpability; much easier to blame the brokers who went out and found them the power they needed to keep the lights on.
Politically, things still have not changed much; it is still a nightmare to get a power plant permitted in California, and I frankly don't know why anyone would want to try.
dang.
Exactly. That's how markets are made efficient.
Thanks to brokers, middlemen, and interstate highways, consumers don't have to grow their own tomatoes or buy them from the farmer down the road - they can buy the cheapest ones available that week whether from down the road or across the nation.
The lack of knowledge of basic economic principles in the California legislature is simply astounding.
In other words, instead of building the additional plants necessary to satisfy growing demand, brokers such as Enron inappropriately utilized "peaker" plants full time to supply base-load power to the grid. Then when peaks did occur, the predictable power-shortages and exorbitant electricty prices followed.
"Peakers" need to be operated as intended: once or twice daily (or even weekly) to satisfy demand peaks. They should not be pressed into service 24/7/52 just because some pinhead "trader" wants the market to create occassional shortages and excessive prices.
We had Republican Governors for 16 consecutive years of those twenty...what do you suggest?...Vote Libertarian?