Energy Experts Are Talking, but Who’s Plugged In?

For years, Severin Borenstein and the other energy gurus met to quietly map the precarious future of a practice people have long taken for granted: flipping a switch for cheap electricity.

Over burritos and salads, the bookish staff at UC Berkeley’s Energy Institute huddled inside their off-campus headquarters--a flimsy building resembling a double-wide trailer--and took turns predicting the brave new world of California’s deregulated electricity market.

Now, in the heat of the state’s haywire power crisis, the technical parlance of these energy academics--from the subtle nuances of “real-time pricing” to “recovered costs”--no longer seem so abstract.

Experts on energy and deregulation say they were largely ignored as California’s power crisis was building, although many of their ideas anticipated it. Now they are emerging from the shadows to take their case not just to decision-makers, but also to the news media.

“When people call looking for answers, we invite them to come to one of our lunches,” said Borenstein, 43, the institute’s director. “After all, we’ve been talking about this stuff for years.”

They’re viewed by many as independent arbiters with no ax to grind, able to interpret not only the vagaries of energy pricing but also the economic motives of the various players: from the lawyers and lobbyists to the utility companies and electricity plant owners.

Instead of seeing their research and ideas relegated to obscure technical journals or bandied about at annual conferences, these academics are now consulted regularly by the nation’s top newspapers. They appear on network television and syndicated radio talk shows.

The politicians and policy wonks have come courting as well. Borenstein and his staff have been joined at their lunches by representatives of the state attorney general, legislative analyst and the California Power Exchange, the state’s electricity marketplace.

They have testified at hearings of the state Senate’s powerful Energy, Utilities and Communications Committee. And Borenstein and Stanford University economist Frank A. Wolak met in San Francisco with Sen. Dianne Feinstein, who wanted to know what she could do to help ease the crisis.

“I’ve always been struck by how complicated this deregulation stuff was and how difficult it is to understand, even for the experts,” said Alan Sweedler, director of San Diego State’s Center for Energy Studies. “But when people ask, you feel a sense of responsibility to come up with a solution.”

For these energy wizards, the phone calls began this summer when electricity rates tripled in San Diego and there were warnings of random power brownouts.

“That’s when people realized this was serious business,” said James Bushnell, research director at Berkeley’s Energy Institute. “Unlike gasoline, where you see big price signs, no one really had an idea of what electricity costs.”

For Borenstein, who specializes in government regulation, this new public concern meant sometimes responding to a dozen frantic phone messages a day, many from journalists.

Bushnell, a 33-year-old campus veteran who prefers wearing ripped jeans to a shirt and tie, is a bit uncomfortable with his new role as a media darling. “The television reporters call from the parking lot and want to rush right in and put you on camera,” he said. “I’m kind of shy and we have this dump of an office, but I’ve made myself presentable and wandered out onto the street to do interviews.”

But in the end, the economists ask, who’s really listening?

“It’s frustrating,” said Stanford’s Wolak. “The evidence is out there--the reports advocating things that could have been done long ago to keep costs down. But with politicians, it has to blow up in their face. They’re not taking advantage of a resource. We don’t have all the answers, but we’ve been thinking about this much longer than they have.”

In a 1997 report for the California Energy Commission, Borenstein and other researchers predicted that electricity prices would soar in a deregulated market unless the power plant owners were broken up into numerous small firms. Otherwise, the report concluded, a few bigger companies could collectively mandate higher prices.

“Policymakers said our findings were ridiculous,” Borenstein said. “We were called alarmists.”

In recent meetings with politicians, Borenstein and others have suggested establishing a real-time pricing system in which electricity prices would rise during peak hours to encourage conservation. They also advocate that utilities form long-term purchase contracts with power plant owners to avoid having to resort to the volatile spot market.

“The politicians nod and say, ‘Good idea. Now I understand what I have to do.’ But nobody’s done a thing,” Borenstein said. “The politicians are making trade-offs.”

Not so fast, say policymakers.

“It’s easy for academics to say higher prices are good for conservation, but we don’t live in any hypothetical classroom or ivory tower,” said an aide to a legislator close to the crisis, who spoke on the condition that he not be named. “They don’t have to sell their ideas to real people. We live in a different world.”

John Roza, an aide to Sen. Steve Peace (D-Chula Vista), chief negotiator of deregulation law, said not even academics are all-knowing.

“Economists have always complained their counsel isn’t heeded--that if someone would only listen to them, things would happen,” he said. “Their concept of conserving power has people turning down their air conditioners on the hottest day of the year. Economists have a very impoverished understanding of human behavior.”

Wolak has tried to persuade the governor’s office to allow Berkeley and Stanford economists to craft a plan for lower energy prices.

“We want to devise a deregulation plan that the governor could take forward from California’s best and brightest, the economists in his own backyard,” he said. “But so far I’ve gotten nowhere. I’ve pestered his chief of staff, but nobody answers my phone calls or e-mails.”

Steven Maviglio, a spokesman for Gov. Gray Davis, says his office has been deluged by so-called energy experts. “For every call from Stanford, there are 100 other messages,” he said. “In a situation like this, everyone seems to have the answer.

“But the experts have been wrong repeatedly. This whole situation has been so unpredictable. But if Professor Wolak wants to send us his plan, we’d love to look at it. We see him all the time on TV.”

Indeed, energy academics such as Steven Stoft are now choosing the media over political huddles to voice their theories.

Stoft, a research fellow at Berkeley’s Energy Institute and a former staffer at the Federal Energy Regulatory Commission, wrote a recent New York Times op-ed essay that he considers a form of rebellion.

Rather than approach his old bosses to suggest such fundamental market repairs as enacting a regional wholesale price cap on electricity to halt windfall profits by power plant owners and electricity marketers, he called the news media.

“I tried to go through the commission’s back door, but people weren’t listening; they aren’t now, never have been and don’t intend to,” he said. “So I sent my message through the public media.”

San Diego State’s Sweedler has worked both fronts to advance his theory of how Mexico could evolve as both a supplier and purchaser of electricity in a deregulated world.

He has spoken on National Public Radio and to the border caucus, a group of American and Mexican legislators. Said Sweedler: “I think people are listening.”

If anything, Energy Institute researchers say the newfound public interest in the once-arcane area of the state’s electricity market has caught fire on campus.

Last year, a course in energy markets co-taught by Bushnell and Borenstein at UC Berkeley’s Haas School of Business was canceled for lack of students when it ran up against an Internet strategy course.

This spring is a different story.

Said Bushnell: “We may have a sellout this semester--thanks in part to the electricity crisis.”