<P> The California electricity crisis, also known as the Western U.S. Energy Crisis of 2000 and 2001, was a situation in which the United States state of California had a shortage of electricity supply caused by market manipulations, illegal shutdowns of pipelines by the Texas energy consortium Enron, and capped retail electricity prices . The state suffered from multiple large - scale blackouts, one of the state's largest energy companies collapsed, and the economic fall - out greatly harmed Governor Gray Davis' standing . </P> <P> Drought, delays in approval of new power plants, and market manipulation decreased supply . This caused an 800% increase in wholesale prices from April 2000 to December 2000 . In addition, rolling blackouts adversely affected many businesses dependent upon a reliable supply of electricity, and inconvenienced a large number of retail consumers . </P> <P> California had an installed generating capacity of 45 GW . At the time of the blackouts, demand was 28 GW . A demand supply gap was created by energy companies, mainly Enron, to create an artificial shortage . Energy traders took power plants offline for maintenance in days of peak demand to increase the price . Traders were thus able to sell power at premium prices, sometimes up to a factor of 20 times its normal value . Because the state government had a cap on retail electricity charges, this market manipulation squeezed the industry's revenue margins, causing the bankruptcy of Pacific Gas and Electric Company (PG&E) and near bankruptcy of Southern California Edison in early 2001 . </P> <P> The financial crisis was possible because of partial deregulation legislation instituted in 1996 by the California Legislature (AB 1890) and Governor Pete Wilson . Enron took advantage of this deregulation and was involved in economic withholding and inflated price bidding in California's spot markets . </P>

The california electricity crisis was borne from a failed version of deregulation that had