Viridian Note 00222: Cali Crisis Weblog

Key concepts: California energy crisis, news sources

Attention Conservation Notice: Vast, endless, provocative of utter confusion, an attention hog of the first order, natters on and on, host of dizzying links

(((The California Energy Crisis is currently front page news. It's certainly not the business of Viridian List to replicate the work of mass media organs. On the contrary, when our issues become mainstream issues, we will gratefully declare victory and shut up shop.

(((However, this is a particularly dense, wicked situation. We believe we can cover some aspects of the crisis that nobody else is telling you about.

(((Our primary Viridian interest is, as usual, the Greenhouse Effect.

(((There's some very good news here. Natural gas is expensive this year because North America is having a cold winter. It's very pleasant to know that we can still have some cold winters.

(((The California crisis has two other weather-related aspects, not so pleasant. First, there's a drought in the Pacific Northwest. The Northwest usually sells a lot of cheap hydropower to California during winter. This year the water-power is not around, and it's lack is sorely felt.

(((The second aspect is lingering aftereffects from California's shocking 109-degree summer of 2000. California's power plants and grid are old and rundown. These weather extremes seem to be hastening their disrepair. Southern Energy spokesman Chuck Griffin has been quoted thusly: "This whole idea of us somehow withholding capacity is completely bogus. We run them until they break." And last summer they broke. California is missing 10,000 megawatts of capacity, due to repairs. If California is going to melt-down every other summer or so, then no infrastructure is really fixable.)))

(((On other bright-side again, many enviros feel that it's just plain good for people to have an energy crisis. For instance, John Schaeffer at realgoods.com is ecstatic.)))

Source: REAL GOODS SOLAR TIMES NEWSLETTER: ISSUE NUMBER 21

"Friday, January 12, 2001 http://www.realgoods.com

"I'm bursting at the seems with the urge to say 'we told you so!' but I'm resisting. (((John is not resisting real hard.)))) (...) As we've seen over our company history, Americans are a short sighted people, and don't tend to take anything seriously until a crisis is upon them. (((Lash those sinners without pity!)))

"So, conservation is back in the news, solar energy is a hot topic, energy independence and being off-the-grid are again coveted, and the phones at Real Goods Renewables are ringing off the hook. Just like they did when Three Mile Island blew, when Chernobyl collapsed, when the Exxon Valdez dumped, when the gas lines grew, and when the Scuds flew to Baghdad...."

(((Boy, life is great, isn't it? But wait.... The crisis has been grim for California's little green utilities. Go- Green, an infant green choice power company, has been killed.)))

Source

Damien Green, Jan. 18, 2001 http://www.salon.com/tech/feature/2001/01/18/green_power/index.html

"Green power in the red "Electricity deregulation is bankrupting California's fledgling eco-friendly energy industry.

"In April, Ray Levinson persuaded the U.S. Postal Service to make the largest federal purchase of eco-friendly power in U.S. history. (...)

"But just a few months after the contract was signed,

electricity prices in California started to jump == an unforeseen result of the state's flawed electricity deregulation scheme. Levinson hoped that the contract would remain secure. Go-Green's power wasn't subject, theoretically, to the ups and downs of the fossil-fuel business, so shouldn't the cost of steam remain stable? He figured Go-Green would be less likely to go bankrupt than a traditional utility like Pacific Gas & Electric."

(((But Go-Green was not a green power generator.

They were just a packager/retailer. Go-Green couldn't "stabilize" a thing, because they didn't own the means of production. It was big, scary, right-wing capitalist guys like Enron who were actually making the green power. And Enron is making money like crazy == or at least, they're owed a lot.)))

"He figured wrong. In September, Go-Green founder Rick

Kohl told Levinson that he was having trouble getting enough credit to buy green power from power wholesalers. The wholesalers (Calpine, Enron and others) had jacked up their prices from 6 cents per kilowatt-hour to about $1.50."

(((Note that this is green power that's going at $1.50 per hour. A green power gold mine.)))

(...) "In December, Go-Green went out of business, abandoning not just the post offices but also MCI WorldCom and 2,500 residential customers who had also decided to go green.

"Go-Green is but one of many clean-energy companies

that have recently ceased operations. TenderLand Power Co. of Truckee, Calif., also booted customers back to the big utilities this month. Several other green power companies in California and in Pennsylvania == another state that's deep in the throes of deregulation == have also fled the business."

(((Actually, Pennsylvania has very little in the way

of "throes of deregulation." There is no "Pennsylvania energy crisis". Pennsylvania has the best-marketed green utilities in the US; people are actually buying the stuff on purpose there. There's also a distinct lack of "throes" in de-regulated Arizona, Arkansas, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Montana, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Texas, Virginia and West Virginia. It's only California that's big on "throes" this season.)))

"The consequences for the environment, say some

industry watchdogs, will be horrific." (((Sorta. It's a mistake to conflate a loss of packagers with a loss of green voltage. California is still the number-one state in the USA when it comes to renewable energy. With sun, wind, hydro and geothermal, California's up to an impressive 12 percent green. There's a huge market for it, too, cost no object at the moment. Nobody is shutting down California's green hardware. But everybody who trusted California's wacky business model is going to the wall.)))

(((How come Go-Green didn't own the means of green production, one may ask? Well, they weren't allowed to. In California's strange legal power-regime, utilities don't get to be generators. So California's "out of state pirate generators" are the out-of-state people who bought California's own generators when the California utilities were forced to sell them in 1996.

(((The most plausible outcome of this crisis? Debt-for- equity. The "pirate generators" quietly buy out the bankrupt shells of the California utilities, in exchange for the colossal debt they're owned for the overpriced gas. Generators walk, packagers talk. Electrons boom, bits brown-out. It's the Next New Thing.)))

Source

San Francisco Chronicle, December 15 02000 by John Lazarus

"While Californians suffer through one of the state's worst energy crises, major power companies are pocketing billions of dollars in profits as they exploit chronic shortages and soaring electricity rates.

"This week, California utilities were paying more than $1,000 per megawatt for power that sold for just $45 at this time a year ago. (((Whoopee!))) (...)

"The leading power generators for California include Reliant Energy, El Paso Energy Corp., Dynegy and Enron Corp., all of Houston; as well as Duke Energy Corp. of Charlotte, N.C.; AES Corp. of Arlington, Va.; Southern Co. of Atlanta; and Calpine Corp. of San Jose. (((Gutsy little Calpine being California's own native "pirate generator.")))

"Most of the plants within the state now run by these firms were previously owned by Pacific Gas and Electric Co. and Southern California Edison, which were forced to sell off their generation facilities as part of the 1996 deregulation of California's electricity market.

"'We used to operate many of these plants, so we know how much it costs to run them,' said Ron Low, a spokesman for PG&E. 'The prices these guys are charging are completely unjustified.'

(((And how exactly do massive interlopers like Enron expect to get away with all that? Well, for one thing, while California's dotcoms are in the NASDAQ tank, Enron is the current darling of Wall Street. The utility sector is way, way up for 2000, so they've got stock-swap money for acquisitions. And then there's this cozy relationship, as well:)))

Source: San Francisco Chronicle, January 17, 02001

"Key Figure in California's Power Crisis Has Bush's Ear

by Phillip Matier, Andrew Ross   Wednesday, January 17, 2001

"One powerful name to keep an eye on during this energy crisis is Kenneth Lay, chairman and CEO of Texas-based Enron Corp., and a close buddy and contributor to President-elect George W. Bush. (...)

"Enron (...) was the single largest contributor to Bush's presidential campaign, giving no less than $555,000, according to published reports.

"Lay even sent top executives a memo on his personal stationery asking them to contribute $1,000 each to the Bush campaign, says the New York Times. (...)

"Lay hired two of Bush's father's Cabinet members and family confidants == James Baker and Robert Mosbacher == after they left office. (((Imagine yourself as some ponytailed California city council attorney attempting to sue James Baker. Oh man! Don't even start with me about "counting the volts.")))

"And just last April, Lay played host to George W. and his dad at the Houston Astros' first home game at the team's new stadium . . . Enron Field.

"Three weeks later, according to Tongue Magazine, Lay joined George W. in Washington for a Republican fund- raiser that brought in a staggering $21.3 million, easily the biggest one-night haul for any political party in history. (((Bring in the kazoos.)))

"What's more, the magazine reports, the Bush campaign borrowed Enron's corporate jets eight times last year to fly aides around the country, although the cost of the trips was later reimbursed as required by law. " (...) (((There's much, much, more == but why even go on. The bright spot: Enron is a very able and innovative energy company. Given enough state and federal leeway and the ignominious death of the old regime, Enron might even be able to re-power California and get the lights back on.)))

O=c=O O=c=O O=c=O O=c=O O=c=O O=c=O The Viridian Cali Crisis Weblog O=c=O O=c=O O=c=O O=c=O O=c=O O=c=O

Good Places to Eat Popcorn and Watch the Brownouts

http://dailynews.yahoo.com/fc/Business/Utility_Industry_Deregulation/ Oddly, Yahoo seems to have the best single compilation of mainstream coverage, perhaps because Yahoo is being directly subjected to rolling blackouts.

http://www.workingforchange.com/activism/powergrab.cfm Working for Change, a progressive credit-card outfit, has hastily thrown up a California power vortal. Crude, but might get better.

http://solstice.crest.org/index.shtml A semi-official organ of the green energy biz. They're very upful about all this.

http://www.pge.com/006_news/current_issues/energycrisis/index.shtml PG&E struggling desperately for public credibility before they go bankrupt, get sued, are massively vilified by their fellow Californians, and end up devoured by Texans. Kind of a touching "honesty of complete desperation" thing going on here. Lots of links.

http://www.eren.doe.gov/electricity_restructuring/ Incredibly boring and useless energy feds. No use looking for national leadership, especially in a Presidential transition; it's gonna be every shark to itself.

Rough and Tumble http://www.rtumble.com California's domestic politics. Not looking good. Not even a little bit.

http://www.energy.ca.gov/maps/index.html State of California energy bureaucrats. Handsome .pdf maps of California power plants, including green ones. Check out those long, skinny gas pipelines. No wonder they've got spot shortages.

http://www.caiso.com California Power Grid. Some hardware nitty-gritty in here if you click around enough.

http://www.awea.org/news/news001222ces.html Wind Energy to the Rescue! "California has recently approved more than 400 MW of new wind capacity (..). While that will push the state's total wind capacity to 2,000 MW installed (..) its wind energy potential, conservatively estimated at 5,000 MW. " (((Great: there's 5000 megawatts of wind in Cali if you cover every hill with whirring iron. Too bad that California needs and uses some 33,000 megawatts in winter, and a whopping 47,000 megawatts in summer.)))

http://www.consumernet.org/turn/who_cares.shtml The Utility Reform Network in California. Big supporters of the 1996 reform, unfortunately for their credibility. Features Naderian Green class warfare at its finest! "Power to the People == At an Affordable Rate" by Ralph Nader   "As they munch on smoked duck ravioli and Squid ink tagliolini at a chic Italian eatery tonight, hosted by the Sempra energy conglomerate, DNC officials might pause between courses to consider the plight of utility ratepayers 120 miles to the south.(...)"

California's Pathetic Restructuring Law:

"Complete Bill History," of AB No. 1890, (1 October 1996) http://www.leginfo.ca.gov/*.*/ab_1890__bill_960924_chaptered.pdf The complete law can be downloaded from the California Public Utilities Commission homepage: http://www.cpuc.ca.gov/

Holden, Benjamin, "Bill Would Allow California Utilities to Recover Losses from Nuclear Plants," Wall Street Journal (29 August 1996), p.A7. (((Californians are still paying for their last power screwup, actually....)))

Weisman, Jonathan, "Congress Looks West for Lesson in Utility Deregulation," Congressional Quarterly Weekly Report 55 (15 February 1997): 412-19. (((And what lessons they received!)))

"Wilson Signs Historic Legislation Restructuring Electric Industry: Ending California's Utility Monopoly Creating the Nation's First Plan to Deregulate Electricity Through Competition," (1 October 1996): http://www.energy.ca.gov/restructuring/ab1890_release.html

################################################## What Other States Think of California's Attitude:

"Western Governors Tell California to Build Plants

"LCG, Jan. 15, 2001 == The governors of five Western states have urged California Gov. Gray Davis to increase efforts to produce more electricity in the Golden State, saying in a letter Friday that 'California is not an electrical island.'

"The governors of Arizona, Nevada, Montana, Utah and Wyoming told Davis that California, to a much larger extent, 'needs to share the responsibility of building more generation plants with adequate fuel supply, electrical transmission facilities and gas pipelines and deal with the inherent environmental challenges that presents.'" ((("Stop consuming the voltage, while we have to eat the smog.")))

California Energy firms. Just look at those revenue growth figures! They're by no means merely due to the California crisis. These utilities know how to make money.

The leading power generating companies in California: PG&E (((the generator, not the utility))) Headquarters: San Francisco http://www.pge.com Stock symbol: PCG CEO: Robert D. Glynn 999 employees: 22,443 1999 revenue: $20.8 billion

1-year revenue growth: 4.4%
1999 net loss: $73 million (((<-----)))

ENRON Headquarters: Houston http://www.enron.com Stock symbol: ENE CEO: Kenneth L. Lay 999 employees: 17,900 1999 revenue: $40.1 billion (((Wahoo!))) 1-year revenue growth: 28.3% 1999 net income: $893 million

CALPINE Headquarters: San Jose http://www.calpine.com Stock symbol: CPN Chairman, president and CEO: Peter Cartwright 1999 employees: 865 (((wimps))) 1999 sales: $847.7 million 1-year sales growth: 52.5% (((!))) 1999 net income: $95 million

DUKE ENERGY Headquarters: Charlotte, N.C. http://www.duke-energy.com Stock symbol: DUK CEO: Richard B. Priory 1999 employees: 21,000 1999 revenue: $21.7 billion 1-year revenue growth: 23.5% 1999 net income: $1.5 billion

RELIANT ENERGY Headquarters: Houston http://www.reliantenergy.com Stock symbol: REI CEO: R. Steve Letbetter 1999 employees: 14,256 1999 revenue: $15.3 billion 1-year revenue growth: 33.2% 1999 net income: $1.84 billion

Dreadful Stuff You Would Have To Read In Order To Actually Understand the Power Industry

Bowers, Brian, A History of Electric Light and Power, (Stevenage, UK: Peter Peregrinus Ltd., 1982).

Collier, Hugh, Developing Electrical Power: Thirty Years of World Bank Experience, (Baltimore: The Johns Hopkins University Press, 1984).

Friedlander, Amy, Power and Light: Electricity in the U.S. Energy Infrastructure, 1870-1940, (Reston, VA: Corporation for National Research Initiatives, 1996)

Hirsh, Richard F., Technology and Transformation In The American Electric Utility Industry, (Cambridge: Cambridge University Press, 1989).

Hughes, Thomas P., Networks of Power: Electrification in Western Society, 1880-1930, (Baltimore: The Johns Hopkins University Press, 1983).

Hyman, Leonard S., America's Electric Utilities: Past, Present and Future, 4th ed., (Arlington, VA.: Public Utilities Reports Inc., 1992).

IEEE Canadian Region, Electricity: The Magic Medium, (IEEE, Canadian Region, 1985)

MacLaren, Malcolm, The Rise of the Electrical Industry During the Nineteenth Century, (Princeton, NJ: Princeton University Press, 1943).

Nye, David E., Electrifying America: Social Meanings of a New Technology, (Cambridge, MA: The MIT Press, 1990).

Rudolph, Richard and Ridley, Scott, Power Struggle: The Hundred-Year War Over Electricity (New York: Harper and Row, 1986).

Tobey, Ronald C., Technology as Freedom: The New Deal and the Electrical Modernization of the American Home (Berkeley: University of California Press, 1996).

(((Hard-hat guys in the energy industry don't waste a lot of time on websites. Instead, they have big, fat, glossy trade magazines, in which to hide the gruesome realities of their trade from the paying customers.)))

Annual Review of Energy, Bulletin of the National Regulatory Utility Commissioners, Cogeneration and Competitive Power Journal, Demand Side Monthly, Ecology Law Quarterly, Electric Power Monthly, Electric Utility Week, Electric Power Research Institute Journal Electrical World, The Electricity Journal, Energy & Technology Review, Energy Law Journal, Inside FERC, [Federal Energy Regulatory Commission] Inside NRC, [Nuclear Regulatory Commission] International Energy Statistical Review, Modern Power Systems, Monthly Energy Review, Nuclear News, Power, Public Power, Public Utilities Fortnightly, Public Utility Law, Rural Electrification.