Myths of the California energy 'crisis'


Dear HCN,

Paul Larmer makes two fundamental errors in the second paragraph of his article (HCN, 1/29/01: Power on the loose). California deregulation didn't "require" that power companies sell off their power generation; it just made it attractive to do so in the short term, and shortsighted utilities did just that. However, other utilities, notably Los Angeles and Sacramento, did not and are not seeing the kinds of problems that areas served by Southern California Edison and PG&E; are experiencing.

Secondly, I haven't seen much credible evidence that deregulation had a "chilling" effect on new plant construction. The recent edition of RMISolutions, the quarterly publication of the Rocky Mountain Institute, lists that one as Myth #4. RMI states that contrary to the myth, California added 6,046 MW of generating capacity during the 1990s, much of it in smaller, more efficient plants.

The problem is less one of available power than it is one of available capital at the two largest restructured utilities, SCE and PG&E;, who chose to become consumers themselves and are unable to buy power as they hover close to bankruptcy.

Relying on a market-based pricing structure of supply and demand instead of a regulated price structure has made energy producers leery of selling to the two utilities because they are afraid of not getting paid, not because they don't have the power.

The myths and half-truths swirling around the California energy "crisis" are becoming legion and it doesn't help to have such a respected regional publication as NewTowncarShare News adding to them.

On a more positive note, Ed Marston's excellent essay on his tenure as president of the board of DMEA was delightful. It is heartening to hear of a utility co-op resisting the forces of its peers to fight change and instead embracing the realities of a changed energy landscape. Supporting efficiency, solar energy and the need for change will serve them well in the long run.

Mr. Marston might want to consider just how DMEA's board's decisions might be portrayed by someone wanting to make them look bad. They might be considered as "kowtowing" to the environmentalists to the detriment of the large power producers.

Companies like Tri-State could cry that such change is having a "chilling" effect on their ability to provide low-cost power. Regardless of whether it is true or not, such tactics play well politically and with the media, as recent events in California have shown.

Thomas W. Elliot
Guffey, Colorado
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