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How California's Power Crisis Works

        | HSW

Not Just a California Problem

California represents about 12 percent of the total U.S. population, with a statewide population of more than 33 million people. It's also home to a disproportionate number of high-tech companies who soak up more energy than most traditional (low-tech) companies. A huge amount of electricity has to be generated to meet the state's power demands.

The impact of the crisis in California is already being felt across the western part of the United States. When prices in California rise -- and they have tripled in since November 1999 -- it has an effect on electricity costs of nearby states, because California is buying electricity from these states. So with California buying more electricity, the amount of electricity available within the state exporting it decreases. The rapid growth of cities like Las Vegas and Phoenix has also contributed to the mushrooming energy crisis.

If you live on the eastern side of the United States, you may think you'll be spared from this most recent energy crisis on the West Coast. However, if the situation continues to worsen, the California crisis could be merely the first domino to fall in a nationwide energy crunch.

At least 25 other states have begun efforts to deregulate their electric utilities; and eventually, each could be faced with the same situation that California finds itself in now. Two states, Nevada and Arkansas, have suspended or are delaying efforts to deregulate their electric utilities for the time being. In the meantime, they will watch and take notes on how California has dealt with the deregulation issue and the effects it has spawned.