The fallout from California's electric power crisis has spurred renewed debate on whether deregulation is a villain or an ally to consumers. Did the deregulated market in California fuel wild trading by energy brokers? Or can free-market trading keep energy prices low? Can regulators be counted on to stamp out illegal or manipulative practice? Proponents of deregulation can point to the transmission grid that includes Pennsylvania, New Jersey, and Maryland and to a system that is apparently working well. These people fear that the recent meltdown of Enron will squelch political support for free markets and to power the thinking that regulation is the lesser of two "evils." In 1996, California became the first state to deregulate its energy market in this country. Under the plan, the utility companies sold some of their power plants and repurchased electricity through a wholesale auction. On paper this free market system would foster intense competition and thus serve to drive down prices. It did not work - wholesale power prices shot up an order of magnitude. Recession coupled with surges in power demand and aging power plants led to the now-familiar spectacle of rampant blackouts in the state. ultimately long-term contracts had to be drawn up by the state government with energy companies at prices well above the market level.
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