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What Energy Crisis?

I tend to be cynical about government so government ineptitude rarely shocks me. The electricity crisis in California provided an exception. It wasn’t just the up front stupidity that amazed but the refusal to acknowledge it even after the fact. It was bad enough that the original “deregulation” program included such regulatory aspects as freezing retail prices, forcing distributors to pay the highest bid price on the wholesale market, and mandating utility divestiture of power plants; the legislature later added a prohibition on entering into long-term contracts, thus guaranteeing all purchases had to be made in the spot market. What is amazing is not that there was a crisis, but that it took so long to happen.

This letter was submitted to both the San Jose Mercury News and the San Francisco Chronicle. It was not published.

29 March 2001

So our government officials have finally accepted unrelenting reality. We have a start at long-term electricity supply contracts to move us out of the volatile spot-market. We will permit retail electricity prices to rise until they cover wholesale costs. Some utilities and the state will remain solvent. Consumers will conserve as a matter of self-interest. Demand will slowly fall; supplies will slowly rise. The “crisis” will abate.

Does anyone else see the irony in this? Isn’t this precisely the solution the utility companies proposed — and begged the Public Utilities Commission to allow — last summer? Had our leaders had the courage to act then instead of now, our utilities would be financially healthy, the state coffers would still have a surplus, and there would have been no “crisis”.

So much for protecting our interests.

© Copyright 2001, 2005, Augustus P. Lowell

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