Rolling Blackout in California?

I recently posted about the rolling blackouts in California and how 22,000 households lost the ability to control their thermostats after a power company seized control of them during a heat wave. These interventions are in response to hot weather and the associated increase in energy consumption for air conditioning, etc.

According to this article, California energy companies have raised the price to $300.55 per megawatt-hour, but still plan on the rolling blackouts. However, back in 2020 power prices exceeded $800 a megawatt hour. It seems that rolling blackouts California and seizing of control of thermostats in Colorado are explicit policy decisions. Based on history, there is room for higher prices to modulate demand…consumers can then respond by reducing usage. While there are equity concerns associated with higher prices during peak load periods, it would seem there is room for price increases and pricing is a more efficient approach to reducing demand. Why are more technocratic policy decisions such as implementing rolling black outs and seizing control of thermostats happening this time around?

Published by markskidmore

Mark Skidmore is Professor of Economics at Michigan State University where he holds the Morris Chair in State and Local Government Finance and Policy. His research focuses on topics in public finance, regional economics, and the economics of natural disasters. Mark created the Lighthouse Economics website and blog to share economic research and information relevant for navigating tumultuous times.

Leave a Reply

%d bloggers like this: