Long, Hot, Costly Days
It’s going to be a long, hot, frustrating and expensive summer in California. Even a grim recent forecast that the state would endure 34 days of rolling blackouts could be optimistic. It could also be a dangerous summer. One energy expert says, “We need to prepare for this as if we’re preparing for a natural diaster.” But we’re not, or not enough, perhaps because Gov. Gray Davis seems loath to admit that the state’s immediate energy future is as bad as it is.
Look at it this way. A megawatt-hour is enough power to serve about 1,000 average homes for one hour. This August, some of those megawatt-hours may cost, wholesale, nearly 20 times what they cost two years ago--an increase from $40 in August 1999 to $750 in contracts already made for this August.
Peak summer demand in California is 55,000 megawatts or more. The state could fall 3,000 to 7,000 megawatts a day short of that, in part because drought in the Pacific Northwest will severely curtail hydropower.
Davis says the $850-million conservation program he signed into law last week, combined with existing programs, can cut at least 5,000 megawatts from peak demand this summer. But at this late date, it will be very difficult to get a persuasive statewide program into effect before the hot days arrive.
Higher electricity rates, pending before the Public Utilities Commission, and the governor’s promise of a 20% rebate for power savings should spur some conservation. Again, those actions have yet to be implemented and are unlikely to have much effect in time for air conditioning season.
Even so, Californians can certainly understand that every kilowatt they save is a kilowatt that need not be scrounged at top dollar. Every thousand kilowatts add up to a megawatt that won’t have to be bought from unscrupulous generators selling at villainous prices during the hours of high demand--prices that will be demanded even if they cripple the California economy that is laying such golden eggs for the sellers.
The biggest power hog is air conditioning, for both homes and businesses. Part of the state’s conservation program is intended to help finance more efficient new systems, but considerable savings can be made through just a good inspection and repair and turning up the thermostat a few degrees.
When blackouts do come, the state and the utilities should put them on a set schedule rather than conducting them at random. This would help eliminate some of the uncertainty and panic involved. Cities with municipal power systems, including Los Angeles, will avoid blackouts but can help by conserving power and continuing to sell the resulting surplus to other parts of the state.
Gov. Davis says he expects to have perhaps four new plants up and producing by August. He spins a scenario of a tough summer followed by a continuous easing as more plants are built, prices come down and the state gets out of the power-buying business. He also says the state will be repaid every penny it has spent to buy power as Sacramento issues revenue bonds funded by the coming electricity price increases.
We can only take Davis at his word. He has not offered an accounting of the spending from the state’s general fund to buy power, both daily and in long-term contracts, or revealed the assumptions that underlie his projections. Of course the money for repayment will come from higher rates paid by consumers. The public interest in how these billions are spent overshadows any fear that companies might find out the details of long-term contracts, which Davis cites as the cause for his secrecy.
Even if residents and businesses are wholehearted in their conservation, however, and even if the state does everything right to increase supply, there’s still the obstinate Federal Energy Regulatory Commission, which seems not to understand the word “regulatory.” FERC refuses to impose a reasonable, cost-based and very temporary price cap on wholesale power sales in the West. The main opponent of price caps, FERC Chairman Curtis L. Hebert Jr., says caps don’t work because “the energy is going to go where the money is.” That sounds just like legendary bank robber Willie Sutton, who said he robbed banks because that’s where the money is.
Open markets are fine--when they work right. Power is a necessity of life. The federal government has an obligation to protect the public health and safety. A temporary cap that allowed for a healthy profit would not discourage energy companies from investing in new power plants. It would certainly prevent Californians from being mugged again and might help the state avoid a true calamity.
