Ref OT < By the way, Californians really don't get it. They complain of price gouging without realizing that had they built a few more power plants in the past decade, they wouldn't be subject to price gouging in the first place. Community and environmental activists protest the building of new generators, then blame Bigtime Corporations when their very efforts created the huge imbalance between supply and demand>
I think that the average Californian is taking needless hits for the present mess. Environmentalists everywhere oppose any new power plant, perhaps more so in California. New power plants are under construction and are coming on stream within the next few years. The construction of new power plants is today mostly in the hands of Power Supply companies.[ The only caveat is that no one wants power plants in their backyard, and as long as power plants are not proposed for urban areas they can be built].
However the supply demand imbalance is a country wide problem. This is due to combination of an excessively long economic boom, the old conservation tricks have run out of steam, and the northwest reservoirs are unusually dry this year.
California really screwed up in its deregulation of electric power utilities. The utilities were required to divest themselves of their electricity generating plants, and were required not to buy their power with long term contracts, but to buy short term power . This made sense to some idiotic legislators and the ex-Governor, because when the deregulation began, short term power was cheaper than long term power.
Now there is a countrywide shortage of electricity, and most of the country has long term contracts, and is using up the available power. Short term power costs today are tenfold of what long term contracts would have been.
Even if California had more plants, these plants would probably have been committed to supply power elsewhere.
The utilities will most likely go broke, and may drag the state down with them. The utilities cannot pass on the increase in cost of electricity, and state guarantees will make the state vulnerable to bankruptcy as well. Electricity producers are having a ball making windfall profits. Companies like Calpine, which bought the electricity generating plants from the utilities are now rolling in money! Worse than OPEC producers in mid-70's. California is rapidly approaching a third world state. California's economic growth will be curtailed for a while. The state government has still not found a solution, and time is running out !
A good example of where the free market system went bad,and an excellent lesson in how not to deregulate. |
