Economists traditionally argue that forward commodity markets allow more efficient risk-sharing and information aggregation. However, there is little empirical evidence that commodity markets provide economic benefits to producers and consumers of the commodity. This paper demonstrates that the introduction of financial trading to California’s electricity market on February 1st, 2011 improved price discovery and lowered production costs. Specifically, we document that the average, standard deviation and maximum of the differences between day-ahead and real-time electricity prices across California fell after 2/1/2011. Moreover, variable input costs (input energy) per MWh fell by 3% (4%) in high demand hours after 2/1/2011.