Well, here in California, before the energy crisis it worked by having an hourly bidding process. Every hour, the energy companies say they can produce x kilowats, and they'll sell it for y. Then, the people who run the grid say we need z kilowats for the hour, pick all the lowest priced suppliers, and I think pay them all the highest bid they accept. Imagine what happens under this system when deman exceeds supply. Now imagine what happens when you fix the price that the energy companies can sell it at to consumers, thus eleminating any link between supply and demand.(*)

Lucky for us, we've now got Arnold fixing all of this.

I suspect Green Mountain works by pulling your buying out of the general power market. Instead of the energy company buying the cheapest electricty around, they have to buy enough to cover you from Green Mountain.

(*)This is how I remember it, I could be completely wrong.

Matthew