Opening up California’s utility procurement process could lead to lower power prices

auction

California passed AB 57 in 2002 to make the power procurement process for electric utilities confidential (as well as subject only to upfront review rather than ongoing prudence standards). The result has been overly high prices locked in for decades.  A new study on the relative gains to landowners who sell the development rights for oil and gas development in Texas shows that using auctions creates more competition among multiple bidders than bilateral negotiations. As a result, landowners get higher prices for their development rights through an auction. The corollary is that California’s electric utilities probably could lower their power purchase costs by moving to public auctions instead. Yet another reason to repeal AB 57.

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