This lesson focused on one of the worst energy commodity market failures in the history of the US - California's Electricity Crisis. Enron and other companies are most well remembered for the manipulative activities in which they engaged during the crisis, but it's important to remember that there were many, many other factors that contributed to California's electricity market failure. These included some factors like drought and hot weather, over which no engineer or politician has any control, but the crisis was exacerbated by some highly complex market rules and the failure of politicians to understand that the risks of price spikes were being spread around California in ways very different from what the market designers had intended. Deregulation in California did not, however, totally kill the move towards electric sector reform in the US. It did, and still does, have a huge influence on market rules and the critical role of market oversight, which we will meet later in this lesson. An irony of California's power crisis is that the "deregulated" electricity markets that we have created are actually among the most regulated and controlled commodity markets in the world.
Reminder - Complete all of the Lesson 7 tasks!
You have reached the end of Lesson 7! Double-check the to-do list on the Lesson 7 Introduction page to make sure you have completed all of the activities listed there before you begin Lesson 8.