Ending the Power Crisis Requires Courage

Facing what is fast becoming the worst energy crisis in our state’s history, many people wonder whether California’s legislators did the right thing when they deregulated our electric utility system in 1996. Some of these very same legislators are now calling for re-regulation and others for a state takeover of California’s multibillion-dollar energy infrastructure.

These lawmakers aren’t just panicking, they’re plain wrong.

No one was paying attention when the Legislature came up with a Rube Goldberg contraption called “deregulation,” which was really just a Christmas tree under which were presents for every interest group at the table. Now comes the time to fix the problem, and some politicians are again behaving as though the most important thing is to protect the groups that can help them get reelected. Finding a solution that makes the best sense for future generations of Californians seems far down on the list.

I left the California Legislature nine years ago, and have had plenty of time to reflect. Perhaps the most important thing I can say now to legislators is this: Do the right thing for the long run, not just the thing that gets you through today’s political typhoon.

This requires that they face some tough facts. I have a simple two-step program to solve much of this immediate crisis. All it requires is political will.

First, no matter how hard we try to build new power plants, California can’t bring new plants on line for at least two or three years, so we must do some serious conservation, and quickly. Despite continuous Stage 3 alerts, rolling blackouts, curtailment of critically important manufacturing processes and the loss of billions of dollars of production, almost nobody is taking conservation very seriously, because we aren’t rewarded for conservation and chastened for waste. Legislators must mandate that electric rates for both private and municipal utilities be redesigned to produce an immediate 10% reduction in usage. So long as we keep sending the wrong price signals, people will over-consume and we will be stuck in a state of crisis.

However, conservation rates alone will not be enough for the long haul. By now we all know what almost nobody knew at this time last year: California doesn’t have enough electric generation or transmission capacity. Step 2 is legislation directing that all qualified electric generation and transmission projects be reviewed and approved on expedited schedules. Projects that are close calls must be given the benefit of the doubt. Air quality and other regulations that made sense when power supplies were abundant should be moderated to ensure that vitally needed plants and high-voltage transmission can be built with minimum delay. That will be a bitter pill for some people to swallow, but they have had their way for the past decade and it has led us to this crisis.

One proposal now making the Sacramento rounds calls for a California Power Authority under which state bureaucrats would micro-manage the gigantic job of providing electric power to 34 million Californians. But why should we trust our energy future to the same so-called energy “experts” who failed to notice our population growing at more than 600,000 per year, who overlooked our demand for power increasing at 8% a year, and who did virtually nothing to encourage construction of even one new major power plant in the last 10 years?

The long-term answers to this crisis lie in private enterprise that is fostered by government cooperation. Half of our state’s generation capacity is more than 30 years old. It will take billions to upgrade existing electric generators, and billions more to build new generation capacity to meet the power demand that continues to soar. Where will this money come from?

Certainly not from the major electric utilities, two of which are on the verge of bankruptcy. And not from the overburdened taxpayers, who must finance long-postponed improvements in our state’s water, roads and education systems.

Only the private sector can do what must be done. The same investors who purchased much of California’s generation capacity from the utilities are anxious to expand capacity and serve our growing markets. Many have plans on the drawing boards for exactly the kinds of investments that will restore sanity to our power markets. But, why would they go forward under a serious threat of public power authority takeover and/or re-regulation that sends cold chills through their boardrooms? This threat must be laid to rest.

Abraham Lincoln wrote, “You cannot escape the responsibility of tomorrow by evading it today.” To my former colleagues I say, reelection is important but ensuring that the taxpayers of California and their children have reliable electric power at reasonable rates for decades to come is far more important. It’s time to do the right thing for the long run.