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[cdn-nucl-l] POWER TO THE PEOPLE in Calif, OP-ED PIECE
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To: Multiple recipients of list ans-pie <firstname.lastname@example.org>
Sent: Thursday, July 27, 2000 2:12 PM
Subject: Energy Looking Glass 2000july26 POWER TO THE PEOPLE OP-ED PIECE
> POWER TO THE PEOPLE OP-ED PIECE
> California's deregulation approach was flawed in key ways
> Orange County CA REGISTER 26 July 2000
> by DAVID KAUFMAN an attorney, an adjunct law professor at George Mason
> University and
> former economist for the U.S. Department of Energy.
> For the past several days America has watched the spectacle of a state
> senator from San Diego urging people not to pay their electric bills.
> Incredibly, the powerful senator has enlisted Governor Davis in an attempt
> to subvert the Constitution of the United States and seriously derange its
> economy and energy policy.
> State Senator Steve Peace has proposed that California break contracts,
> interfere with interstate commerce and confiscate the assets of
> power companies without due process or paying full compensation. Senator
> Peace proposes these radical actions because of a temporary rise in
> electric prices in a single city. And who was the chief architect of the
> policies that caused high prices in San Diego this summer? Senator Peace.
> California is the bellwether state in the movement to deregulate
> electricity and let market signals dictate when new generating plants and
> power lines should rebuilt. Over 30 other states have followed
> lead. However, most commodity markets allow for some form of 'pledging,"
> i.e., contracts that assure future supplies at a guaranteed price. The
> California power exchange doesn't. This prevents California utilities from
> taking steps to assure California consumers adequate power at a fair price
> in trying times.
> When worried California utilities tried to hedge in other power exchanges
> in the West this winter, Senator Peace and his allies blocked them. He
> considered hedging "gambling with ratepayers' money." But not hedging is
> also gambling with ratepayers' money. When the price of natural gas
> this spring and a heat wave hit California; utilities in the state were
> forced to pay high "spec" prices. Many regions had blackouts. In fully
> deregulated San Diego, ratepayers saw their bills double.
> In the days of regulated rates, utilities could level out these temporary
> spikes with higher year-round prices. In a deregulated market, the
> consequences of poor power planning show immediately in the customer's
> bills, but high prices also attract new supplies to ease the shortage.
> Senator Peace and Governor Davis have adopted a much more radical economic
> approach: the best way to deal with a shortage is to pay less. (Has
> everyone forgotten President Carter's oil price controls and the panic
> shortages they caused in 1979 ?) Two weeks ago Peace tried to cap prices
> paid for the 'last" kilowatt-hour on the system at 25 cents.
> When members of California's Independent System Operator refused to go
> along with this 25-cont cap, Senator Peace and Governor Davis threatened
> pack the board. One member quit, complaining of "a process that is so
> corrupt and manipulated with fears of removal and reprisal"
> Senator Peace has made public threats against the power corporations that
> the state encouraged to enter the deregulated market a few years ago. He
> has advocated the use of emergency powers to retroactively change rates in
> San Diego and to force independent power generators to sell to the state
> the state's terms. If not, he threatens re-regulation or confiscation of
> their power plants.
> The problem with Peace's scheme, like his call for customers to tear up
> their bills, is that it is illegal and unconstitutional. Has Senator Peace
> ever read the Constitution? California has no right to expropriate
> without fair compensation and no right to interfere with interstate
> commerce. This will only lead to a series of messy lawsuits that will drag
> on for a decade.
> Worse, if California tries, the result will be serious blackouts and
> billions of dollars in damages to the U.S. economy. California imports
> about a quarter of its electricity from other Western states. It is the
> biggest market player in the West and it contains the crown jewels of
> American technical leadership, Silicon Valley. Utilities in neighboring
> states may continue to sell excess power to California, but no one will
> build new plants to serve the burgeoning California electricity demand.
> The threat of re-regulation is even more wrong-headed. If out-of-state
> power generators won't trust California to honor a contract, what sane
> investor would buy the stock of a utility at the mercy of such
> The senator and his allies in the governor's office may be able to defy
> federal law for a while, but do they really believe they can violate the
> laws of economics? Where are the rest of the lawmakers in California who
> will face the wrath of their constituents when the blackouts come? Where
> are the consumer advocates who fought so long for deregulation? Where are
> the voters in the rest of the state who will end up paying for this chaos?
> Regards email@example.com whois Gene Cramer