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[cdn-nucl-l] South Calif: TRUE DEREGULATION HASN'T COME TO LIGHT
----- Original Message -----
To: Multiple recipients of list ans-pie <email@example.com>
Sent: Friday, July 28, 2000 12:43 PM
Subject: ENERGY LOOKING GLASS 2000JULY28 EDITORIAL: TRUE DEREGULATION HASN'T
COME TO LIGHT
> EDITORIAL: TRUE DEREGULATION HASN'T COME TO LIGHT
> Orange County REGISTER 2000july28
> As we sat in a conference room listening to representatives from San Diego
> Gas and Electric describe how they do business and how they plan to cope
> with spiking electricity prices, we couldn't help thinking: "If this is
> deregulation, what would regulation look like?" Under what is laughingly
> called "deregulation" the company has been forced to divest itself of most
> of the power generating stations it had built previously, it is required
> law to purchase, through an auction, electric power from one market source
> and one source only and it is required to allow other power companies to
> use the distribution system it built over the years.
> If this is the way to build an open, free and competitive marketplace,
> the way to store ice cream is in a furnace. As C. Wayne Crews, energy
> policy analyst for the Competitive Enterprise Institute in Washington, DC
> put it to us: "What we've seen in California - and in most other states -
> is not deregulation of the electricity industry but legislated
> restructuring.'' Not surprisingly, it hasn't made the 'industry
> and flexible enough to cope with peaks and valleys in demand without high
> prices for thousands of customers.
> The fundamental problem has to do with supply and demand. Since AB 1890
> passed in 1996 (when the economy was in a relative doldrums and people
> moving out of California) the economy has rebounded, unemployment has
> fallen and demand for energy has grown at about 1,000 mw - the output of
> two generating plants - each year. But no new generating plants have been
> built in a decade. Last Summer's weather was relatively mild, which masked
> the problem. But we all know how hot it has been this summer and witnessed
> the kind of strain put on electricity supplies when everybody wants to run
> an air conditioner at the same time.
> The companies like SDG&E, Edison and PG & E, which used to be called
> utilities but now are essentially distribution companies, get their power
> from something called the California Power Exchange, a centralized
> mechanism set up by state legislation, which gets requests from
> distributors and solicits from power producers each day, setting prices
> based on what producers offer, then transmits the power to distributors.
> The price varies from day to day, and when it's high the cost, SDG&E's
> case, is passed along to consumers. SDG&E has asked for a new tool from
> Public Utility Commission, a "forward purchase program" whereby it could
> seek a fixed amount of power for a fixed price for a longer period - say
> August through December. That could help to stabilize prices, but it
> wouldn't solve the long-term supply problem.
> The main barrier to new supplies is - surprise, surprise - a government
> regulatory and permitting process that is lengthy and expensive. At the
> least, that process needs to be streamlined.
> Eventually, Wayne Crews suggests, authorities might have to consider real
> deregulation, not restructuring that creates artificial mechanisms with a
> superficial resemblance to markets. "The key is dismantling territorial
> franchises," he told us. "Just the threat of somebody else creating a
> distribution system will release competitive pressures that will
> drive prices down. You also need competition on the grid, not a monopoly
> created by the state."
> That's a long-run hope. For the short run, distribution companies like
> SDG&E can offer level payment plans, flexible payment options and an early
> payout to customers of money from a trust fund created by an extra charge
> authorized by AB 1890 in 1996. The best short-term advice to consumers?
> down on air conditioning and demand real deregulation.
> RELATED STORIES
> 1) FRONT PAGE HEADLINE : ELECTRICITY RATE CAP IS URGED
> 2) PAGE 4 : DAVIS FALLS INTO HOT SEAT OVER HIGH ELECTRICITY RATES
> Governor Gray Davis wrote letters to various parties advocating a
> rate cap, unspecified. The Board is meeting next week to consider a
> $250/MW-hr cap,.
> 3) SDG&E PARENT SEES EARNINGS JUMP BY 34% Sempra Energy quarterly
> income rose 34% to $110 million lifted by a rise of $40 million in its
> energy trading unit and $2 million from sales from a Nevada power plant.
> Meanwhile sales at SDG&E FELL 15% to $40million.
> 4) Several half-page ads from SDG&E advocated switching to its "annualized
> payment plan", constant monthly payments based on last years costs. (NOTE:
> This plan has been available for years.)
> Regards firstname.lastname@example.org whois Gene Cramer