Like Duncan, I lived in California during the California energy “crisis”. I had a unique perspective on the issue, because as the majority of the state was subject to rolling blackouts and insane energy bills as a result of the power company’s manipulation of the market, I had the good fortune to have my power controlled by the city of Los Angeles. Strangely enough, I had no blackouts, no wild gyrations in my electrical bill. Somehow the supposedly evil government had kept the lights on at a fair price while the great barons of privatization bent the people of California over a table.
It’s an experience that soured me on the privatization mantra and Democrats who bow at its altar (like Gray Davis). We shouldn’t do it with vital resources like power.
Or the Internets.
The problem ollie is that everything becomes “vital”.
Food, water, transportation (to get the food), oil (to supply the power and transportation), internet(s) (to transmit the information needed to supply power, water, food) Phone (ditto), banks (to supply the money for the food water power), housing (for the people getting the food, water, power, money, transportation)……etc,etc, ad infinitum…..
“The problem ollie is that everything becomes vital .’
When presented with a model that works and a model that obviously failed to work, the conservative idiot chooses the system that failed. Classic.
Well we have federal protections of one sort for all those things for a reason. The constitution. Do you really think that something as vital to modern life as electricity shoulld be subject to pump and dump manipulation?
No I don’t. But while pure privatization is not a good idea, neither is pure government control.
I think you need government regulation/law, and that it needs to be enforced. Enron is a demonstration that the law works….
I would be curious as to what interpretation of the Constitution writes laws pertaining to transportation, housing etc.
Do you really think that something as vital to modern life as electricity shoulld be subject to pump and dump manipulation?
Considering that the ‘deregulation’ scheme cooked up by the state included a part where it was mandated that purchases were made in the spot market, wouldn’t you agree that the government was partly to blame?
You’re forever spouting Marxist rhetoric as though the state is the savior. Here you are happily telling everybody how the government of LA controlled it all without thinking of how that would aversely affect other areas of the state.
Jay: It s now Marxist to prefer for the state to run a vital resource like power instead of a bunch of rogue energy traders?
No Oliver, you sound Marxist when you go on these rants bashing private industry and thinking the boobs that control the government know better and that we’re better off trusting them.
As for energy, when deregulation is done CORRECTLY, it can benefit the public at large as it did in New York.
The government s blame lay in allowing, as Democrat Gray Davis did, the power companies to write the laws they would be subject to.
Sorry, but that is just wrong. Here is what happened:
1. The state forced electricity companies to sell their power plants to independent investors which made the companies nothing more than distributors.
2. The state seized day to day control of the utilities wood and wire to make sure they couldn’t take advantage of their market power.
3. The owners of the now divested plants were required to sell their power to a state managed ‘pool’, the sales price established by a spot market that was run…..by the state.
In addition, and you should know this, after an investigation it was learned in early 2001 that the publicly owned utility companies were charging more than the privately owned ones.
The bottom line is, contrary to this view of Enron as the THE BIG EVIL, the large portion of the blame falls on the very entity you believe is the only thing that can save us: the government.
Jay: It’s now “Marxist” to prefer for the state to run a vital resource like power instead of a bunch of rogue energy traders? I didn’t realize one had to march with Castro to think that Grandma’s oxygen shouldn’t be subject to the whims of Ken Lay and Jeff Skilling. There are numerous things that should be subject to public trade, where the investors are well aware they could lose their shirts – but a vital tool like energy isn’t. The government’s blame lay in allowing, as Democrat Gray Davis did, the power companies to write the laws they would be subject to.
The city government absorbed the cost of Enron’s shenanigans, and I and the other residents were thankful for that – would you have preferred we had blackouts in Los Angeles and riots and worse cascading from that? I think not. I don’t think the state is a savior, but I believe it is a tool to be used to preserve order when we are all being assaulted in one form or another.
Pedro: I think the gov’t should control some basics – for instance, water, electricity, the military. Enron is not a good example for saying the law works because they were allowed to run roughshod in the first place. The law isn’t just there to clean up messes in my view, but to stop them in the first place.
“No Oliver, you sound Marxist …”
There you go again …
“You re forever spouting Marxist rhetoric …”
Now, now, Jay we had a little talk about this didn’t we?
Jay C, You are so very, very wrong on this issue. The power generators, namely Enron, Williams, Duke, reduced the supply of in-state power by taking generation off-line. While in this reduced capacity, they then manipulated imports so that the spot market prices were at times as much as 400X the price of in-state generation. The fact that the state managed the imports does not make the price they buy at any more or less expensive.
By the way, do you even know what a publicly owned utility company means? It doesn’t mean government, bud, it means investor owned, and I am not sure where you get your faulty data because the best prices in California have always been in SMUD and LADWP, both of which are municipals.
There’s plenty of room for market activity – even in investor-owned and municipal utilities. To give them unregulated opportunities for manipulation is stupid and dangerous and leaves one of our most inelastic demanded goods at the mercy of predatory manipulators. Enron was but one of the recipients of “Aunt Millie’s money,” to quote their own evil words.
Sorry for the double post.
While in this reduced capacity, they then manipulated imports so that the spot market prices were at times as much as 400X the price of in-state generation. The fact that the state managed the imports does not make the price they buy at any more or less expensive.
When some idiot for the state calls and offers to pay $500 a megawatt hour for a 7 hour period when if they knew what they were doing, could have paid $250, that’s not the fault of the energy companies, but the state.
By the way, do you even know what a publicly owned utility company means? It doesn t mean government, bud, it means investor owned
Huh? Publicly owned utilities like SMUD are owned by the customers, hence the term PUBLICLY OWNED. And those utility companies, SMUD included were charging more than the Enron
I hit submit to quick (damned laptop keyboard)
“…..charging more than than Enron, Dynergy and Reliant (All privately owned). $344 per megawatt as opposed to $250 per megawatt. Read it here.
Jay, you are mixing up your facts so bad my head is spinning. Neither LADWP nor SMUD had a problem during the 2001 energy crisis. That is what Oliver, who lived in LA, is saying. Furthermore, there was no problem with either energy procurement or pricing in either territory. As a rule, the munis generally have lower and more stable rates across the board.
It was the rest of the state, i.e. the investor owned utilities i.e. Sempra, PGE and SCE, who procured their power from Enron, Dynegy, Duke and Williams, which were screwed. The REASON they were screwed had everything to do with manipulation. Here is the FERC case on the issue.
If you are going to argue this case, get your facts straight. Rather than getting your facts from a SF Comical article, why not go to the economists who have studied the issue in some detail.
Neither LADWP nor SMUD had a problem during the 2001 energy crisis.
Who was talking about a problem? You cited SMUD as a municipal that had the “best prices” when clearly that was not the case. The SF article was merely a cite as to where I came up with those dollar figures. Rather than dismissing a source out of hand, refute it with facts of your own.
The overall point here, is that Oliver seems to think the government is better equipped to control power in the state. What he fails to see (even though he actually admitted it without knowing it) and what you fail to comprehend is that there is cause and effect. Even FERC figured it out when they said, “that supply-demand imbalance, flawed market design and inconsistent rules made possible significant market manipulation as delineated in final investigation report. Without underlying market dysfunction, attempts to manipulate the market would not be successful.”
It was the very same government that Oliver wants to turn everything over to that screwed the pooch. I am not denying that energy companies used the setup that was in place to maximize profits, but the system they manipulated was put in place the government – by a bunch if pinheads that didn’t know what they were doing. What’s worse is that it was FERC that approved California’s regulatory scheme!
Jay,
You are just way outside your depth here and making arguments that contradict your own position.
Here is the current rate schedules for baseline residential throughout California:
PGE (E-1) – .1143 / kWh
SCE (Sched. D) – .1037 / kWh
SMUD – .0866 / kWh
LADWP – .0728 / kWh
The munis have consistently provided more reliable, cheaper, more effective service than the state IOUs. It’s just that simple. You want to debate it? Great. Take out your calculator and subtract either of the first two from either of the second two. When you come up with a negative number, it means you lost this point. Moving on.
What you are arguing is that somehow “deregulation” (i.e. the elimination of government regulation for the purpose of making a market ) made the government’s responsible for the California energy crisis. I just don’t see how you get there. Power generators manipulated the market. Energy traders manipulated the market. It was not the government that took generation off-line and it was not the government that sold power on the import market for outrageous prices.
Sorry, but OW wins this point. Some parts of the economy are just too critical and vital to our well-being to leave at the mercy of crude, unregulated market forces.
Z, are you paying attention? Showing me current rate schedules is pointless when discussing events that took place 5-6 years ago. And 5-6 years ago, it was shown that the munis and others that were out of state (such as Seattle City Light and Canada’s BC Hydro) were charging on average more than the Enron’s.
What you are arguing is that somehow deregulation (i.e. the elimination of government regulation for the purpose of making a market ) made the government s responsible for the California energy crisis. I just don t see how you get there.
Of course you don’t see because you’re not paying attention. The ‘deregulation’ plan was not a deregulation plan at all. The supposedly ‘free’ market in this case was still controlled by the government. They still made many of the rules. They designed the regulatory scheme and created the rules in which the energy companies had to operate. It was the state Department of Water Resources who had incompetents working for it that would call for instance, Modesto Irrigation District and order power at $500 per megawatt hour without even attempting to negotiate.
Sorry, but OW wins this point. Some parts of the economy are just too critical and vital to our well-being to leave at the mercy of crude, unregulated market forces.
Unfortunately, as I have to keep repeating, what California did in 1996 was not deregulation.
And Oliver misses another point. He was happy about what LA did, but doesn’t stop to consider at what expense it was to the rest of the state. Think about it. LA worked under price caps that kept prices lower, but as such, there was no incentive for the city or the residents to conserve power. As such, other areas of the state, like San Diego were forced to deal with the consequences of the caps that were in place throughout other areas of the state.
The problems with California were not the result of energy being left to unregulated market forces, but instead in large part due to political micromanagement and market distortions.
Ah, yes. The old “well it wasn’t real deregulation!” whine.
By the way, they did not bend us over a table. They bent us over a pinball machine. And fucked us in the ass with a pool cue. Hard. Without lube. Over and over again.
Considering that the deregulation scheme cooked up by the state included a part where it was mandated that purchases were made in the spot market, wouldn t you agree that the government was partly to blame?
Why yes. It was cooked up when the conservatives were in charge of everything in California.
You do remember that the GOP held the Senate, House and governor’s mansion at that time, yes?
Too bad the rest of the country didn’t learn that lesson – put conservatives in charge now and you’ll pay for it for years. It’s a lesson the rest of the country is learning now thanks to the idiot conservatives we have in charge.