No other area of the United States has experienced the potential supply-demand imbalance in electric power that currently confronts California. Historically, public utility commissions, there as elsewhere, set prices in order to deliver a guaranteed rate of return on capacity, whether it was used or not. That capacity "buffer" settled around 15 percent of summer peak loads in many cases.
For a variety of reasons – including a failure to expand capacity in response to increased demand – the previous summertime buffer in California has by now largely disappeared. Because inventory buffers are not feasible for electrical systems, capacity buffers must absorb the full brunt of supply-demand imbalances.