In the aftermath of the California energy crisis, there has been a shift in the focus of electricity regulators away from the fostering of a competitive market structure and towards the application of regulations to specific market outcomes.  Such a focus stands in marked contrast to the general principles governing competition policies in other industries.  This shift is in part influenced by the clear failure of earlier attempts to establish a competitive market structure in California.  But was this a failure of the policy, or of the tools that were used to implement it?  In this chapter, I describe the tests historically used by regulators as screens for the potential abuse of market power by suppliers. More advanced methods, such as models of oligopoly competition, can potentially provide a much better understanding of the competitive outlook for a market.  However, much uncertainty surrounds the development and application of such models.  I apply an oligopoly model of the California market to actual market data to test the ability of such models to recreate true market outcomes.  I also explore the potential impact of an alternative plan for the divestiture of California's thermal generation units.  The results indicate that a more substantial, but still plausible, reduction in supplier concentration would have saved consumers nearly $2 billion during the summer of 2000.

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