Regulation Is Better Way to Ensure Power Supply

I am not persuaded that deregulating electricity is a wise move [“Deregulation Is the Answer, Not the Problem,” James Flanigan, Aug. 27]. With regulated monopolies, we had no electricity shortages, and that included the great industrial expansion of World War II.

The reason the state didn’t approve any new generating capacity was that it knew that when deregulation came, the new capacity would have to be sold to private buyers.

There haven’t been any new oil refineries built in the last 20 years in this country because to build an oil refinery, you have to have a guaranteed supply of oil for 20 years. Likewise, to build a generating plant, you must have a guaranteed supply of fuel for 20 years.

In today’s energy climate, these guarantees are hard to obtain. Most of the new electric generation is being done with natural gas because it is relatively pollution-free and still in fairly good supply. But as a result of this new demand, the price of natural gas has doubled in the last 24 months.

The state didn’t keep the Los Angeles-owned and -operated Department of Water and Power from building the generating capacity it needed, and it is the only utility around with surplus capacity.

At one time, all utilities had surplus because the public utility commissions required it and allowed them to make a return on the surplus capacity.

Private electric generators rely on buying electricity from the market when they need more. They don’t want to pay for investment in standby capacity. If I am making 25% on my newly purchased generating plants, why should I build more capacity that will knock down the return on my existing plants?

Not having to invest in standby capacity, operating from areas where there is cheap land and having lower wage costs because they don’t offer the perks of regulated utilities do allow these companies to generate more cheaply using natural-gas-driven turbines, but these advantages might not always be there.

The system of regulated monopolies providing utilities served us well. If it ain’t broke, don’t fix it.

R.C. MASON

Simi Valley

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I am one of the 100,000 south Orange County ratepayers who has been victimized by the incredible jump in my electric bill. I have not been placated by the paternalistic “We must all share the initial burden of deregulation if we are to benefit later.” From my perspective, I see no “sharing” of the initial burden by San Diego Gas & Electric.

The consumer should not be required to carry the entire burden of the initial increased costs under deregulation; it should be shared equally by the industries benefiting from it.

F.W. MUELLER

Dana Point

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James Flanigan’s “Simple Steps May Ease Self-Inflicted Electricity Woes” [Aug. 25] was a reality jolt.

In the early 1990s, the California Energy Commission forecast need for generation by the new millennium, while SDG&E;, Southern California Edison, Pacific Gas & Electric, Northern California Power Alliance, the Los Angeles Department of Water and Power and Anaheim issued and then canceled formal requests for new power plants.

The utilities opted for short-term power purchases during the mid-1990s, which at that time was the preferred market choice. By now, several thousand milliwatts of low-cost, environmentally sound power plants could have been built to meet the expected shortfalls.

The pendulum has swung and California is now paying for short-term gains of the last decade. Today’s extreme price volatility is a market signal that we need more power plants or to find ways to use less electricity.

Price caps will only worsen the problem. New California power supply will be discouraged, causing increased reliance on non-capped, out-of-state generation to meet real-time needs. More participants and increased liquidity are needed to achieve market equilibrium prices.

ROBERT HOFFMAN

Redondo Beach

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There’s no question deregulation should ultimately work to our benefit, assuming real competition comes to the state.

However, little or nothing has been done to encourage increased use of solar energy. We live in a state where the sun shines roughly 90% of the year. Yet from Silicon Valley to San Diego, you can look out on a sea of houses, apartments, warehouses and offices, very few of which have solar panels on their rooftops.

This is not just some liberal environmentalist scheme; the use of solar panels saves money, and that increases productivity and lowers energy costs and demand for conventional fuels, be they fossil or nuclear.

MICHAEL SOLOMON

Los Angeles

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Perhaps we should pay more attention to France’s successful use of nuclear power.

F.W. SCHOTT

Santa Monica