Up until last year, there was a large structure in my small backyard. It was a 10-foot brick chimney with a fireplace, an open pit for barbecue, and flagstone countertop. It came with the original 1924 house. It was also as superfluous as a structure can be. When I invested in men with sledgehammers to tear it down, I discovered that the brick structure has a term of art: it\u2019s called a \u201cfolly.\u201d The more I watch the California Independent System Operator try to build a new wholesale energy market, the apparent demise of a capacity market, and the struggle to build carbon cap-and-trade and offset markets, the more I think: folly. Although profits may be on the horizon for traders, the only people who are making money now are reasonably compensated staff (the California Air Resources Board, California Public Utilities Commission, and CAISO) employed to create the various markets. There are also mountains of billable hours for private attorneys and consultants. My folly, however, was somewhat useful. I had a bunch of barbecues. Yet, I don\u2019t miss it at all. I\u2019m getting the same way with markets. If traders and generators want profits, they could do well by being regulated. Their dreaded \u201ccommand and control\u201d by the state is working quite well for investor-owned utilities these days with a solid return on equity investment of over 11 percent. It may not be as much fun as a roller coaster market, but there\u2019s ice cream at the end of the end of the ride. Speaking of fun, (unless you\u2019ve invested in Exxon-Mobil, etc.) you aren\u2019t having much fun at the gas pump these days. Nothing left over for ice cream there. There\u2019ve been reports in the last few weeks that at least some of the huge price increases by the gallon are due to trading speculation. It\u2019s different from the 2000-01 energy crisis, where some traders allegedly used the wholesale market side bets to maximize profits. (I once heard an Enron executive proudly explain how the company was going to cause congestion on the CAISO grid in order to get maximum returns. Hey, it wasn\u2019t illegal.) With gasoline, it appears to be futures speculation. Congressional testimony pins the practice with driving the price of a barrel to its current high. With the grid operator\u2019s planned new market, there will be opportunities for many speculative side bets. It\u2019s not simply trading energy when the grid needs it or wants to get rid of it. To make it simple, I\u2019ll call them \u201cancillary services.\u201d The grid operator has spent years and worn out many of its staff trying to set up a more perfect market. And, you have to remember that only about 5 percent of the CAISO grid trades in the wholesale market--down from 35 percent during the energy crisis. CAISO basically runs the grid for investor-owned utilities--Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric. The Sacramento Municipal Utility District, the Los Angeles Department of Water & Power, and the Western Area Power Administration run a significant portion too. They get along without wholesale markets, for the most part. Yet CAISO is trying hard to create a bigger market, causing a lot of costs that are put into rates to make it work. The latter munis find it much easier to just run their own grids without markets--it\u2019s simpler, less headaches, less of a roller coaster. For some background on my skepticism: when the state deregulated the electric industry in 1996, it required investor-owned utilities to spin off most of their fossil fuel power plants. Companies like Reliant and NRG Energy bought the power plants then sold the power, often on a wholesale basis, to the grid operator. At the time of deregulation, regulation, called \u201ccommand and control,\u201d was a dirty word in the halls of the California Public Utilities Commission and the Legislature. Regulators and legislators believed that slick and quick witted competition to monopoly utilities (generally seen as stodgy and gold plated) would bring down the price of electricity--then about 2.5 cents a kW. The power of the market, they believed, would create more efficiency and lower the price. But by the time of the energy crisis the megawatt\/hour prices topped out at $10,000. Today\u2019s hybrid market is capped at $400\/MWh. Let me use a different metaphor here. The roller coaster is something you can risk. If you fall, you will probably still be alive. But now, imagine this: say you want to get from wherever you are to Tahiti. To do so you need to fly a commercial airline. The Federal Aviation Administration (command and control) no longer inspects airplanes. Due to the current rising airline prices and mass cancellations of flights, the FAA decided the market itself can better handle safety with little more than a rubber stamp review by the agency. Imagine that travelers now have to figure out whether JetTV or Deltrap flights are safest. They are no longer under command and control. Airline companies can choose to lavish money on maintenance, or free drinks, or cut corners--it\u2019s up to them. That might be a bit much in the metaphor department. You\u2019re unlikely to crash if markets don\u2019t work. Yet, electricity, like safe air travel, is deemed a necessity in the U.S. So, while you can take a risk on a roller coaster, you really don\u2019t want to take one on your flight to Tahiti. You have to rely on regulators, inspectors, and those who avoid cutting corners. Maybe it\u2019s my risk-averse attitude these days, but when it comes to my computer being able to tap into an electric plug, I get demanding. I want command and control. I want regulators. I want infrastructure. I want a less carbon intense environment. And, as much as it kills me, I\u2019m willing to pay the exorbitant rates to have that reliability--through regulation, not markets. And, don\u2019t make me fly commercial.