The electric power thing in CA was IMO caused by (a) halfway deregulation
(wholesale and not retail) AND (b) failure to anticipate future growth in
demand. Back in 1996 there was not a shortage and the electric rates were
frozen at what was then above market. THere was NO incentive to build more
generating capacity given the market at that time. (Short term thinking -
something inherent in business as in human nature.) Also, only shortage
spurs conservation. Whenever supply goes up demand goes up with it.(SUVs
replacing compact cars eg.) Use today, don't think about tomorrow. It was
also foolishly anticipated that competition would somehow materialize out
of nowhere! There was little reason for anyone to go *compete* in a
sort-of deregulated market rather than the fully deregulated market found
in some other US states and in the UK.
So BIG SURPRISE! An economic boom and demand wildly outpaces supply!
Now we're stuck with 3 short term options:
--govt does nothing, PG&E goes bankrupt, we end up with rationed power
like some war-torn third world nation; PG&E's nightmare and everyone
elses's. Nobody's going to let that happen...or are they....
--govt bails out PG&E and the state goes bankrupt instead.
--PG&E gets carte blanche to raise rates as muchas they need
to. Everyone's bills go through the roof. No politician will go for the
kind of public outcry this would generate. (The rate increase that is
happening anyway is bad enough.) But hey, it would be free market, supply
and demand. A Hoover Institution guy (can't remember its name) suggested
in the merc news op-ed page that instead of trying to subsidize the
utility the state should subsidize power for lower income people who
cannot afford free market rates (an energy version of food stamps.) I
say: Families making $40K or even $50K a year (well above PG&E's own "low
income" threshold where they give you a break) have trouble affording
HOUSING in the bay area market; any govt energy-welfare program would have
to use a very loose definition of "low income" if you ask me. It would
actually cause the greatest hardship to moderate income people because in
Silicon Valey if you are not affluent you are struggling.
anyway, there will definitely be harm done to the economy because of
people's reduced spending power when what used to be disposable income
goes to pay energy bills. (Unless maybe you're in the solar panel
business; Real Goods is already getting a bonanza out of this I hear.)
The long term? Well, they'll buld more power plants; NIMBY stuff *may*
ease up a bit, but still.....Fossil fuel plants of course. Ugh. Awful for
the environment but hey, we oughta learn out of this that there's too
***ing many people in CA (or in the world for that matter) and try to
limit growth somehow. (Fundamental contradiction: economies must
grow; endless growth uses up and destroys the planet. That's why I'm a bit
pessimistic about whether the environment can really be saved....)
or hey, maybe we should acustom ourselves to permanenet shortage mode
because only shortage gets people to conserve!! No one will notice we are
using up the planet until everything is gone! By then it will be too late
to save the human race....
Kristin
