California's Deregulation Disaster | The Nation


California's Deregulation Disaster

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"It's all been a big shell game," says Oakland-based activist Paul Fenn (see www.local.org). "The distribution companies are causing panic by threatening bankruptcy with huge paper losses. But the parent companies are quietly taking huge profits while not accounting for all that stranded-cost money, which is tucked away in foreign and out-of-state investments. Meanwhile, the public gets no tangible assets in exchange for the subsidies. It's an astounding ripoff."

About the Author

Harvey Wasserman
Harvey Wasserman is senior editor of FreePress.org and co-author, with Bob Fitrakis of As Goes Ohio.

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The '60s come alive again in the protest organized by the Clamshell Alliance against the Seabrook nuclear power plant in New Hampshire.

The nuclear power industry has dropped a $50 billion bomb into the Senate version of Obama's stimulus package for projects Wall Street wouldn't finance when it was flush.

Through it all, dereg apologists are having a hard time explaining why two California power companies were immune to the crisis: the Los Angeles Department of Water and Power and the Sacramento Municipal Utility District. Both are owned by the public, and both maintain heavy commitments to renewables and efficiency. In 1989 Sacramento voted to shut its one nuclear reactor, and has since pioneered a major shift to solar, wind and biomass energy, with heavy commitments to conservation.

During the crisis, rates charged by both companies have been stable. The two "munis" actually made money selling power to their embattled private neighbors, underscoring the fact that throughout the United States, public-owned power districts supply electricity cheaper and more reliably than the private utilities. The California crisis has already spurred grassroots movements in San Francisco, Davis and elsewhere to demand municipals of their own. "In the long run," says author Dan Berman, "public ownership is central to any real solution to the problems of the electric-utility grid."

So is conservation. At the peak of the crisis, Governor Davis ordered widespread efficiency measures that kept demand down without significant impact on the health and safety of the public. "Had the state been more aggressively pursuing efficiency all along," says Coyle, "much of the crisis could have been avoided."

Nonetheless, the constant drumbeat for more generating capacity will be hard to counter. And the widespread assumption is that any new power plants will be fossil- or nuclear-fueled. But every US reactor ordered since 1973 has been canceled. There are none now under construction here, and resistance would be ferocious, especially in light of nuclear power's role in prompting the crisis in the first place. A year ago, natural gas would have seemed the logical choice for new generating capacity. But prices have soared and aren't likely to come back down soon.

Which leaves what the consumer/environmental community that opposed AB 1890 has been arguing for all along--renewables. The most notable new Western power plant is now stringing its way along the Oregon-Washington border. It consists of 450 windmills with sufficient capacity to power 70,000 homes. With construction under way in February, electricity could be surging out by December 31, a far faster construction timetable than for any other source. The fuel supply will be cheap, stable and clean. Environmental opposition will be nil.

Thanks to 15,000 windmills built in the 1980s under Governor Jerry Brown (now mayor of Oakland), California once produced 90 percent of the world's wind power. But the big utilities wanted little to do with them. Last year the world-leader's mantle slipped to Germany, which built the equivalent of a large reactor's capacity in wind power. Had California done the same, things might have been different. "The message is clear, " says Coyle. "The power supply needs to be controlled by the public. And efficiency and renewables work. Do we have to go through this again to relearn those lessons?"

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