OT, RE:CA and power
Calfornia spent the last couple of decades encouraging natural gas demand. This was logical, because natural gas is probably the most environmentally efficient power source for California.
That doesn't mean that natural gas has no environmental issues, however. And California didn't like those issues. Issues like power plants fired by natural gas, pipelines to transport the gas, and rigs to get the gas out of the ground. California has regulations in place to limit all of those more so than the rest of the country. And the one greatest drawback to natural gas, its lack of transportability, means that when you limit drilling and pipelines, it is impossible to get natural gas to its desired location. It doesn't matter how much you are willing to pay. The gas just isn't there.
All of this is good and well, and California is certainly free to decide that they want a clean envirnoment. But California has not yet recognized that this desire has a cost. Electricity should cost significantly more in California than in the rest of the country. Until Californians come to grips with the fact that the market price for electricity is much, much higher than it is in the rest of the country, there will be problems.
Once market prices can be established, then solutions will begin to happen. People will conserve energy out of economic self interest. Up until now, there has been little conservation because energy prices have been subsidized. Once this disincentive is gone, a lot of this waste will be eliminated. Higher energy costs will also be a convenient disincentive to business to locate in California, cutting back on demand from that end.
If you want prices more consistent with the rest of the country, regulations must be eased. There is a trade off between cost and the environment. But when you've got powerful political forces like Cisco blocking a much needed power plant in San Jose, then there is still a lot of work to do, and probably a lot of forced pain.
As to who will pay right now for the problems, there won't be any federal bail out. There is little interest in the rest of the country to help California out of a problem that was entirely created within the state. There is also a willing source of cash. The debtholders and the shareholders of PCG and EIX will be out several billion dollars, and both utilities will possibly be sold. My guess is that somebody like Duke Power will come in and buy the assets for a song, with the stipulation that they be allowed to charge market rates. Thus, a free market ends up being forced upon Californians. And Gray Davis ends up out of a job. |
