A new framework for studying markets as the product of organizational planning and understanding the practical limits of market design. The Western energy crisis was one of the great financial disasters of the past century. The crisis began in April 2000, when price spikes started to rattle California’s electricity markets. Decades later, some blame economic fundamentals and ignorant politicians, while others accuse the energy sellers who raided the markets. In Failure by Design, sociologist Georg Rilinger offers a different explanation, one that focuses on the practical challenges of market design. The unique physical attributes of electricity made it exceedingly difficult to introduce markets into the coordination of the electricity system, so market designers were brought in to construct the infrastructures that coordinate how market participants interact. An exercise in social engineering, these infrastructures were intended to guide market actors toward behavior that would produce optimal market results and facilitate grid management. Yet, though these experts spent their days worrying about incentive misalignment and market manipulation, they unintentionally created a system riddled with opportunities for destructive behavior. Rilinger’s analysis not only illuminates the California energy crisis but also develops a broader theoretical framework for thinking about markets as the products of organizational planning and the limits of social engineering, contributing broadly to sociological and economic thinking about the nature of markets.

Our analysis and other studies found evidence that wholesale electricity suppliers exercised market power by raising prices abov.

Audit report concerning the CA Dept. of Water Resources' mgmt. of the power-purchasing program. Concludes that in the aftermath of the Calif. energy crisis of 2000 & 2001, the dept. has had some successes in renegotiating its power contracts to better match consumer demand, reduce contract costs, & improve the terms of the agree. During 2002, the dept. was able to minimize its sales of surplus power, but it was not able to coordinate the dispatch of its power resources with those of the investor-owned util. Many aspects of the State's power market remain unresolved incl. creditworthiness of the util., long-term governance of the utilities' power procurement practices, further develop. of new power supplies, & investigations & litigation.