No Superhero Antics, Please
We all recall the dire straits that led to the formation of the new state power agency: blackouts, bankruptcy and spiraling, crazy prices. Now the energy supply seems ample, even in 100-degree heat, but the power authority becomes reality anyhow with the swearing-in Tuesday of its five-member board. What, exactly, should it do?
The California Consumer Power and Conservation Financing Authority--its official name--was intended to balance the market control that was so brutally wielded by private power generators earlier this year. It has immense potential power and a $5-billion bond-fund kitty. It has the authority to run out and build new power plants or gas pipelines and make public power the dominant force in the California market. It should resist that kind of superhero action, now that the immediate emergency has faded.
On the timid end of the spectrum, the authority could just help finance solar panels in new housing developments or aid customers in buying energy-efficient appliances.
It should steer a middle course, even though that will be harder to envision. For instance, by joining with private firms to rebuild old, inefficient, polluting power plants, the agency could increase the available supply and help clean the air. The public authority also needs to brake the ability of the private generators to control the market, but without driving them out of the state. We still need the private companies, which now own much of the generating power once controlled by the state’s big private utilities.
The crisis taught us that electricity is too great a public necessity to trust entirely to private markets. Government should be ultimately responsible for assuring an adequate supply of both electricity and natural gas.
This task formerly rested with the state Public Utilities Commission, but the PUC lost much of that clout when the electric power system was deregulated under legislation passed in 1996. Again, this change can’t be undone because the utilities’ plants are no longer subject to state control; many are even located out of state. The power authority has the luxury of time to construct a strategy that will balance market forces without the sledgehammer of a giant new public power scheme.
The authority also can fix some of the mistakes the state government made in reacting to the crisis. One example: More than 90% of the power the state bought under long-term contracts will be generated by natural gas. As we learned, the gas supply can quickly become limited and very costly. California needs to diversify its energy base by supporting production of alternative and renewable sources such as solar, wind, biomass and geothermal. The new power authority can organize and finance such efforts.
Some fear that the chairman-designate, S. David Freeman, former head of three giant public power agencies, including the Los Angeles Department of Water and Power, may lust to build a new empire. But Freeman paints a more limited picture: He wants to supplement the existing power structure and rush in to fix things when the private companies are slow to act.
That’s fair enough, provided he builds a clear framework to guide those actions. We’ve all seen too much reacting in costly haste to poorly understood forces that threaten the state’s people and economy.
