Posted on 10/11/2003 8:32:00 AM PDT by Pokey78
Edited on 04/13/2004 2:44:20 AM PDT by Jim Robinson. [history]
Gov.-elect Arnold Schwarzenegger is preparing a push to deregulate the state's electricity markets -- a move embraced by business leaders and some energy analysts but criticized by many Democrats and consumer advocates as a return to the failed policies that sparked California's energy crisis.
(Excerpt) Read more at sfgate.com ...
At least they acknowledge part of the of problem last time we never really had true deregulation last it was more a government controlled cartel
I’m a free market capitalist and believe it the best system there is
However this does not mean there not crooks out there setting up sweetheart deal... Wilson’s bunch already screw us once... when this all said and done will it be government paws off or will they still be a finger in it to steer the deals to there buddies
I do not trust these people
Nope, the projections are that California will add another will have nearly 46 million residents in July of 2020. Where will they get the juice?
The only reason to deny that and to keep associating Brulte's name with it exclusively is an anti-GOP agenda.
Power companies are reluctant to even begin the permitting process. It can take years and millions of dollars to find out the answer is no.
Governor Schwarzenegger can't eliminate those obstacles; only the legislature can do that. I imagine he can make some political appointments to the various regulatory agencies and commissions involved, which could help. I know he can make two appointments to the PUC, but it's the other boards involved that are the biggest problems.
Well, that and the NIMBY attitude of residents...
Correct, he can make appointments. He can also exert significant pressure within department staff. After all, there's always exile. California is blessed with a variety of sensitive environments in need of their careful attention and vigilant protection, such as Needles, Barstow, and Twentynine Palms.
The way to look at this is by observing what happened to the long distance telephone market after Judge Greens broke up ATT's monopoly.
The same thing can happen in the power industry. There will be innovation after innovation creating hundreds of thousands of new jobs. It is not unreasonable to expect portable fuel cell generators run off of natural gas lines or stored propane to be placed in new residential home tracts and replacing old distributed power lines.
America does best when America lets its free market system work.
We have the same goals, so cut the ideological babble, OK? You have no idea who you are addressing. I have thought about it, a lot. My current occupation is all about designing transitions between regulatory and free-market systems.
California's production capacity has been artificially depressed by nothing less than regulatory racketeering over a period of twenty-five years. Environmental groups were funded in order to foist that shortage so that the companies owned by the tax-exampt foundations who funded them could make a killing. There are people who belong in jail. Bryson among them.
Now, deregulate in that environment again with that kind of shortage and the prices will spike in exactly the same manner they did before. Yes, investors would then race to fund construction and run into the same regulatory buzzsaw we have now. It's all happened before. It's an unnecessary shock to the system that creates irreversible and unnecessary damage to the customer base. It may be good for bankruptcy lawyers, enviro-litigators, and relocation consultants, but it's not good for California business. We are better off transitioning to a free market more slowly, even if it costs a bit more in the long run just to preclude the cost of that shock. It took us twenty five years to get into this mess; we can stand to be patient for a couple more to dig our way out.
The key is to increase the differnce between peak production capacity and peak demand. First, on the supply side, there is a fraction of capacity that can be increased relatively quickly by upgrading existing facilities. The whole point of eliminating new source review in those cases was to allow installation of cleaner equipment with marginally higher efficiency. That should move forward now. Second, there are a number of plants that have not been constructed but are permitted that pulled out their commitments in the middle of the mess a year ago. There is should be little to stop allowing those permits to be transferrable or renewable. Third, I would temporarily cap the profit on the sale of excess power by municipal utilities (only). On the demand side, I would instruct the PUC to ignore the meter-readers' unions and institute time-of-day metering on virtually all accounts as rapidly as possible. A program to put timers on electric water heaters similar to the referigerator rebate program would help there too. Fifth, I would work with the President on the Healthy Forests Iniative to get sufficient chips to existing biomass plants. The smoke from a power plant is a lot less harmful than the smoke from a forest fire given the same tonnage of material.
Power companies will accept a predictable return as long as they know that they won't get screwed later. There isn't a lot of difference to them between a moderate profit for longer and a wild profit for a few years followed by cutthroat competition (the usual pattern in deregulation). Two years is long enough to build enough capacity to soften the transition, especially with the reduced demand we have resutlting from the current recession. The regulatory cost of installations tying up construction funds, management, and personnel, is perhaps even a bigger downer to investing in California than is the PUC controlled market.
My guess is that within two years, the State could be ready to initiate a fully free market on the model of Texas. There probably will still be a bump in prices when the system releases to open market pricing because the State still needs an excess capacity of (my guess) 15-25% in order to accommodate both a recovery and an increasing population. The funds for that will come out of that bump. Two years isn't such a gory delay that offends the sensibilities of anybody who rationally supports free markets considering how long we have gone on with the existing stupidity. At least it keeps customers who can't tolerate the shock but can make it in the longer term from going bust unnecessarily.
Given that it will take some time to roll back some of the rules (assuming the legislature is willing), and the time it takes for businesses to commit to make the investment, I think California will be hard pressed to expect new capacity on a large scale within five years. Unfortunately, it's likely to become a crisis before then, and a certainty if there is another drought.
I'd love to see California decide to build a new nuke. There's no reliance on fossil fuels, and no pipeline or emission issues. But now I'm just dreaming...
It may be good for bankruptcy lawyers, enviro-litigators, and relocation consultants, but it's not good for California business.
Some businesses signed long term contracts that they are very happy with.
Was the breakup of long distance services years ago bad for business?
We are better off transitioning to a free market more slowly, even if it costs a bit more in the long run just to preclude the cost of that shock.
Sounds like a plan generated by a committee in the People's Republic of China.
Carrie_Okie:
I am not trying to insult you or argue but you accused me of ideological babble but what do you call your position other than ideology?
Also the ROI is a very important parameter in business planning that is linked to power prices. Even if the permitting process is streamlined, the pricing of power may preclude a decision to develop.
Lastly, there is nothing barring the currently contracted power providers form delivering power at a nonshock price for their remaining term while simultaneously allowing businesses to sign new contracts for new power services.
Good luck.
Yup. It's aggressive. Given the implementation of the suggested changes on the demand side, I think the curves cross in a doable fashion. Remember, we are only talking about peak capacity. Unless I miss my guess, between upgrades of existing equipment and permits in place now we might get a large fraction of that 5% in peak capacity we absolutely need within that time frame.
Given that it will take some time to roll back some of the rules (assuming the legislature is willing), and the time it takes for businesses to commit to make the investment, I think California will be hard pressed to expect new capacity on a large scale within five years.
I am not talking large scale. I think only 5% increase on the supply side and a 5% reduction in peak demand may be sufficient to keep the market from going berserk when we let it go. Of that 5% reduction, I think a lot of it could come from timers on water heaters and AC units. Of course, if Johnny boy has another fire in San Onofre...
Unfortunately, it's likely to become a crisis before then, and a certainty if there is another drought.
If there is a drought, you are correct there would have to be a delay. I am assuming all other factors remain equal.
I'd love to see California decide to build a new nuke. There's no reliance on fossil fuels, and no pipeline or emission issues. But now I'm just dreaming...
You and me both! How about ten of them? Hydrogen or desal plants would then be a real possibility.
I did note, though, that California's population (according to state estimates) is projected to increase to 46 million people by 2020, up from 34 million in 2002. All things being equal, that means that you have to increase your supply by 25% in the next 17 years, just to stay dangerously thin.
How in the hell are you going to do it, since you can't build any more Shasta or Oroville dams?
Power companies, obviously. Were you paying attention during the shortages of 2002? See the *calpowercrisis index for details.
Some businesses signed long term contracts that they are very happy with.
As negotiated by their hand picked boy working for Davis. There's a reason Edison International and John Bryson donated over a quarter million for Davis' election.
Was the breakup of long distance services years ago bad for business?
The initial conditions were different. You will recall that the infrastructure during the breakup of AT&T was entirely adequate to meet the ramp in demand. It was still a mess at first and didn't have to be.
Sounds like a plan generated by a committee in the People's Republic of China.
Well your preference to me looks to me like it was either cooked up in Steve Peace's office or based upon a poor understanding of the current physical condition of California's power grid, pipeline system, and generating capacity.
I am not trying to insult you or argue but you accused me of ideological babble but what do you call your position other than ideology?
You did insult me, you got pedantic on a very elementary level while making assumptions that are not supported by facts. The plan I suggested is a practical way out of a criminally induced shortage. There was racketeering, influence buying, manipulation... Why should the people and businesses of California reward that? Why should small businesses go bankrupt because of unnecessary price shocks?
Also the ROI is a very important parameter in business planning that is linked to power prices. Even if the permitting process is streamlined, the pricing of power may preclude a decision to develop.
Duh. Does it really matter that much if the ROI is spread out over five years instead of one as long as the area under the present value curve is the same? In many respects a power company might prefer the former.
Lastly, there is nothing barring the currently contracted power providers form delivering power at a nonshock price for their remaining term while simultaneously allowing businesses to sign new contracts for new power services.
Peace's deregulation did not permit long term contracts and was restricted to the spot market.
My private business is better than ever...can you say the same?
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