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.
Such a system, confronted with relatively inelastic demand, cannot avoid extreme price increases or, alternatively, blackouts when demand for power plus an operationally minimal capacity buffer approaches or exceeds available supply. This would be the case whether power is being generated in a wholly free market or in the wholly controlled markets that in decades past were governed by public utility commissions.