ncial instability, increased consumer demand, and the demand for environmentally conscious electricity generation, regulators became concerned about the fiscal health of the electrical industry and its ability to maintain an adequate level of service to customers.
The California PUC responded to the troubled period of the 1970s by attempting to decrease demand through promoting efficient energy use, redesigning the rate structure, and exploring alternatives to fossil-fueled electricity plants. Implementation of these objectives required the extensive involvement of government: "By the end of this period, utilities and regulators, despite controversy and conflict . . . forged a complicated set of mechanisms and procedures to protect utility financial health and provide consumers with greater rate stabilizing" (Dasovich, Meyer, and Coe, 1993, p. 56).
The California approach to the energy crisis of the 1970s involved DSM (demand-side management) and LCP (least-cost planning). According to Cicchetti and Sepetys (1995), the Arab Oil Embargo played a pivotal role in the evolution of electric utilities from emphasizing the supply-side of utility management to the current emphasis on conservation and long-range planning (p. 31). Prior to the embargo in 1973, consumers had grown accustomed to a decades-long pattern of falling oil prices. Subsequently, oil consumption by the American public grew steadily, generally at a rate parallel with the nation's GNP, reaching its peak in 1970. The Oil Embargo changed this scenario: "The quadrupling of energy prices which followed shocked the energy system and forced an assessment of supply, demand and price of energy domestically. It also forced Americans to reassess our domestic political perspective and to assume a more global perspective in our thinking about energy supply and consumption" (pp. 31-32). The result was a sharp decline in energy requirements for the United States. During t...