And why would generators all of a sudden have to raise their price as soon as this deregulation occurred?
It wasn't all of a sudden. From the wiki article:
Drought, delays in approval of new power plants,[6] and market manipulation decreased supply. This caused 800% increase in wholesale prices from April 2000 to December 2000.
TFA also says partial deregulation legislation passed in 1996. There were at least 2 years between when legislation was signed and when the crisis started. However I guess you never had to suddenly start using AC. When everyone suddenly turns their AC on there is a sudden demand for energy. And yes, I am saying the CA government is responsible for the crisis. It interfered in a market and that usually causes unpleasant things to happen. When people are not concerned about how much they have to pay for something they will not be conservative in it's use. But those who sell have to pay for what they do sell, and if the price they pay is higher than what they can sell for that is bad for them, and everyone else involved.
I'm pretty sure the energy traders walked through that door on their own accord,
A door the CA government created with bad regulations. Notice I said "bad regulations", I am not against totally regulations, especially when there is a government created monopoly, such as energy distribution. I am okay with splitting the ownership of generating capacity with the ownership of the power cables, and pipes, that provide the energy. I favor regulations or laws requiring whoever owns the cables to allow independent energy producers to tap into the cables. If I have the money and I want to build a wind farm, I want to be able to tap into the electrical grid. And as long as I can do so safely I should be allowed to. Same goes for solar farms, tidal generators, and geothermal power plants.
Falcon