Publication Date: Wednesday Mar 14, 2001
ENERGY: Rolling blackouts not going awayAssemblyman says power will be scarce this summer
by Marv Snow
California residents can expect rolling blackouts this summer regardless of any preventative actions taken by the state, Assembly Speaker Pro Tem Fred Keeler told members of the Commonwealth Club of Silicon Valley last week. "What is this summer going to be like?" Keeler (D-Boulder Creek) asked club members at the Thursday meeting, held at the Palo Alto Art Center. "Either God-awful, awful, or we can struggle through it comfortably if we conserve."
"The governor is doing a good job of getting us through this," Keeler added. "We didn't (plan well) and we didn't do anything to keep the supply up and demand down."
Keeler said the state is currently 6,000 megawatts out of balance, but conditions could improve slightly if more businesses and homeowners begin using green power, such as photovoltaic (solar), wood, wind or plant power-producing generators.
Keeler added he has sponsored a bill, which was approved by the Assembly, that makes a number of changes in power billing and production. "It eliminates the cap on the use of solar power," he said. "Utilities cannot charge a standby generator and the cap on solar watts has been upped to one megawatt."
According to Keeler, in the early 1990s the state was paying 20 percent more for power needs than the rest of the country.
"In exchange for being a monopoly, they got the benefits for that monopoly," Keeler said of the good situation California utilities were in from being the sole suppliers to various areas. "They were guaranteed a rate for investment."
Keeler said the state's first serious error in deregulating utilities was the failure to require Pacific Gas & Electric and Southern California Edison to enter "a deal with the buyer (of their generating plants) to sell back to the seller. PG&E sold Moss Landing (a power plant) to another electricity company.
Now the same product that they were paying 1 cent for is costing them 30, 40 or 50 cents more than they were paying."
One third of all the power generated in California, according to Keeler, is still owned by PG&E. Some of the remaining power is mandated for purchase from small generators (which are on the verge of bankruptcy because PG&E refuses to pay its bills).
"The feds deregulated natural gas and prices spiked," Keeler told the crowd, adding that gas prices, not electricity, are the real problem because electricity rate charges are frozen by the state under the deregulation plan.
"San Diego got to experience rates in real time," Keeler said. "Rates went up 300 percent. Businesses closed that will never open again.
"They (utility companies) are eating the difference (in what they are charged for power and what they can charge customers for power). They are eating millions."
Keeler said PG&E wants to "privatize the profits and socialize the problems. The utilities might go bankrupt. The federal bankruptcy court and federal bankruptcy judge and the creditors are charged with solving the problems. They have to take care of the creditors. That's a very bad place for us to be."
Keeler said Gov. Gray Davis will veto any bill that raises rates, but warned "there is a rate increase in your future to solve this problem. Don't believe in the Energy Fairy (solving the energy crisis without increases)... it just isn't going to happen.
According to Keeler, the plan is to stretch out the process of solving the problems over a period of time. "We have to stop the bleeding of the utilities, get it under control financially," he said.
The way to accomplish that goal, he said, is to provide contracts that will drive down the price by regulation, from 17 cents to 8 or 9 cents per kilowatt-hour.
"We will buy an asset from them. The flavor of this week is the transmission system," he said, adding he would have preferred the state buy the hydroelectric generation plants since they produce power at a lower rate.
"What we're solving now is a financial problem. This summer we will experience a supply-and-demand problem," Keeler said.
Keeler also addressed charges that California's environmental regulations contributed to the energy crisis.
"Environmental regulations have had nothing to do with the lack of growth of facilities," Keeler said "The utilities fought building them. I want to dispel that rumor.
"We do need more supply. We're tearing down the barriers. We're tearing down the barriers to get people off the grid," Keeler said. "Our future is down that way (alternate power sources)."
Asked if he felt there was collusion between energy providers to jack the price of power up, Keeler replied, "I don't know. I don't have enough data. There really aren't many buyers and sellers. It is inaccurate to characterize this as a free market."
Keeler, however, said the state will regulate the shutting down of generating plants to keep the facilities from going down at the same time, causing a shortage of power and rolling blackouts.
"We have a responsibility to get through this," Keeler said. "I'm opposed to not fixing what's wrong with the wholesale market. It is not a commodities market."
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