Here’s how things worked in the bad old days: you flipped a switch on the wall and the lights came on. Between 1900 and 2000, electricity went from a luxury to a necessity upon which life as we know it depends. The same evolution will probably take place with the Internet in this century. Cable tee vee at a minimum.
But electricity, upon which the Internet and cable tee vee, and therefore, life itself, depend, is not the sure thing it used to be, at least not in California. Throughout the 20th century, even in its early, luxurious days, electricity was deemed too important to be left to the free market. Electric utilities were granted monopoly rights over a given area, but in return their activities and rates were supervised by public utility commissions. The public and private sectors worked together to ensure the supply of electricity would always meet demand, that power would keep flowing in times of disaster and that the utilities would make a guaranteed profit without crippling the average ratepayer.
As we know, power corrupts, and electric power corrupts absolutely. The people who operate the electric utilities became, over the course of a century, very close to the people who regulate them and, more important, to the politicians who appoint the regulators. Rates crept higher and higher and utility customers, especially commercial and industrial customers – who are also close to politicians – started thinking we would all be better off if electricity was tended by the invisible hand of the free market.
The utilities liked the idea, too. Deregulation would allow them to sell their generating facilities and use the profits to diversify their investments, into areas like telecommunications and foreign utilities.
California deregulators didn’t count on the late 90s economic boom driving up the demand for electricity. On the supply side, the utilities stopped building power plants 10 years ago, when they saw deregulation on the horizon. So demand is rising, generating capacity is lagging behind and the utilities have sold their power plants to third parties. How can anyone claim to be surprised by what happened next? The new power generators, who all passed Economics 101, pulled some of the power plants off-line, calling it “maintenance,” thereby reducing the supply of electricity and sending the price through the roof. None of this is particularly complicated, it’s just OPEC with wires.
Two of California’s three major utilities are prohibited from raising rates to consumers until they pay off their stranded costs, in other words, their old debt. Squeezed between the energy they can’t afford to buy and the rates they’re not allowed to raise just yet, the utilities were soon $12 billion in the hole, the blackouts were rolling and the utilities were screaming for the state to bail them out.
But, before the state of California comes riding to the rescue, it should be noted that $12 billion is about what the utilities got when they sold their power plants and then invested in telecommunications, et cetera. Those funds should be liquidated before Joe and Jane Los Angeles have to pay for their electricity twice.
George W. Bush woke up from his nap and announced the California power crunch is a good excuse to drill for more oil and relax air pollution standards. It might not occur to the oil president that the quickest and cheapest way to save electricity is to give homeowners a tax incentive to insulate their houses and buy energy-efficient appliances.
With all the fuss about California losing its tanning bed capacity, few people noticed that the predictions for global warming are now worse than ever.
The Age of Unlightenment
Here’s how things worked in the bad old days: you flipped a switch on the wall and the lights came on. Between 1900 and 2000, electricity went from a luxury to a necessity upon which life as we know it depends. The same evolution will probably take place with the Internet in this century. Cable tee vee at a minimum.
But electricity, upon which the Internet and cable tee vee, and therefore, life itself, depend, is not the sure thing it used to be, at least not in California. Throughout the 20th century, even in its early, luxurious days, electricity was deemed too important to be left to the free market. Electric utilities were granted monopoly rights over a given area, but in return their activities and rates were supervised by public utility commissions. The public and private sectors worked together to ensure the supply of electricity would always meet demand, that power would keep flowing in times of disaster and that the utilities would make a guaranteed profit without crippling the average ratepayer.
As we know, power corrupts, and electric power corrupts absolutely. The people who operate the electric utilities became, over the course of a century, very close to the people who regulate them and, more important, to the politicians who appoint the regulators. Rates crept higher and higher and utility customers, especially commercial and industrial customers – who are also close to politicians – started thinking we would all be better off if electricity was tended by the invisible hand of the free market.
The utilities liked the idea, too. Deregulation would allow them to sell their generating facilities and use the profits to diversify their investments, into areas like telecommunications and foreign utilities.
California deregulators didn’t count on the late 90s economic boom driving up the demand for electricity. On the supply side, the utilities stopped building power plants 10 years ago, when they saw deregulation on the horizon. So demand is rising, generating capacity is lagging behind and the utilities have sold their power plants to third parties. How can anyone claim to be surprised by what happened next? The new power generators, who all passed Economics 101, pulled some of the power plants off-line, calling it “maintenance,” thereby reducing the supply of electricity and sending the price through the roof. None of this is particularly complicated, it’s just OPEC with wires.
Two of California’s three major utilities are prohibited from raising rates to consumers until they pay off their stranded costs, in other words, their old debt. Squeezed between the energy they can’t afford to buy and the rates they’re not allowed to raise just yet, the utilities were soon $12 billion in the hole, the blackouts were rolling and the utilities were screaming for the state to bail them out.
But, before the state of California comes riding to the rescue, it should be noted that $12 billion is about what the utilities got when they sold their power plants and then invested in telecommunications, et cetera. Those funds should be liquidated before Joe and Jane Los Angeles have to pay for their electricity twice.
George W. Bush woke up from his nap and announced the California power crunch is a good excuse to drill for more oil and relax air pollution standards. It might not occur to the oil president that the quickest and cheapest way to save electricity is to give homeowners a tax incentive to insulate their houses and buy energy-efficient appliances.
With all the fuss about California losing its tanning bed capacity, few people noticed that the predictions for global warming are now worse than ever.