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Energy Commission Expands California's Crisis

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Energy Commission Expands California's Crisis

FERC Price Caps Confirm Predictions of Dwindling Supply Across Western States

Washington, DC, July 9, 2001— After only a few weeks of expanded price caps, what was once the California energy crisis is already spreading to neighboring states. Despite the warnings of numerous economists, energy analysts, and the Competitive Enterprise Institute, the Federal Energy Regulatory Commission (FERC) last month saddled the 11 western states with price caps on wholesale electricity, restrictions that are now spreading shortages across the West.

Facing increased summer demand and uncertainty over what prices producers would be allowed to charge, Nevada experienced rolling blackouts of its own last week, in addition to a "Stage 2" alert for California over the Fourth of July holiday.

"The new caps are exactly the opposite of what California needs," said CEI president Fred L. Smith, Jr. "Price caps and other bureaucratic restrictions were exactly what plunged California into its crisis in the first place. As we are seeing now, extending the same failed strategy across the West only worsens the situation."

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