The problem is not supply per say in California, the problem is realiability. Under deregulation, the power companies don't have to maintain any level of production. As a result, they don't. They are free to turn the generators on and off whenever they want. They can leave the generators off if the price is low, thereby driving up the prices. When the demand and the price is high enough, they turn on the generators and make a ton of cash very quickly.

But let's not blame the folks in Los Angles. In fact, they have the solution to the entire problem - public power. LA has it's own power supply and transmission capabilities. Their first responsibility is to their own customers, not the open market. Therefore, while the rest of California and the Pacific Northwest get hit with high energy bills and blackouts, LA still has reasonable rates and no blackouts. That's the way it is supposed to work.