Are you worried about the power shortage and the impact it may have on the
US by next summer? I heard on tv the other night that the problem will soon
be America's problem since the country is interconnected with power grids.
I think the Bush's refusal to help out is a terrible mistake. If the energy crises
spins out of control it will not only have an impact on homeowners but it may
eat into corporate profits.
Did you see Governor's Locke's editorial in Ny Times last week?
February 2, 2001
Caught in the Electrical Fallout
By GARY LOCKE
O LYMPIA, Wash. — If pragmatic action isn't taken soon to fix the
broken electricity market threatening the economy of the West, our
national prosperity could be seriously harmed. And the federal
government — not just California and the neighboring states now finding
themselves forced to share its problems — must be involved in the
solution.
In the State of Washington, we elected not to deregulate our retail
electric power industry. We continue to expect utilities to serve their
customers with low-cost power while earning a fair rate of return. But
now, caught in the fallout of California's energy meltdown, we, too, are
facing potential shortages, skyrocketing prices and escalating debt.
We are on the same electric grid — regional power market and
transmission system — as California. (More than a dozen Western states
are on this grid.) Usually this helps everyone: Washington sells power to
California in the summer, for example, helping it keep its air conditioners
running, and buys from California in the winter to keep our homes warm.
But the current unexpected and serious power generation shortage in
California drives prices through the roof for us, too, affecting our utilities,
businesses and citizens. Some utilities in Washington are now paying
more than 10 times what is normal for power at this time of year.
Adding to Washington State's burden is an unusually dry winter. Too little
rain has fallen to fill the reservoirs behind our dams. In some areas, like
Lake Roosevelt, behind the Grand Coulee Dam, we haven't seen water
levels this low for 25 years. Even if we get normal rainfall for the rest of
the season, this year's mountain snow pack — which melts to feed our
reservoirs in spring and summer — will be at 50 to 70 percent of normal.
And if we divert too much water from our rivers for power generation,
we use supplies needed for migrating salmon and agricultural irrigation.
The utility that serves Tacoma has instituted a 50 percent surcharge for
power, and the one that supplies Seattle has passed 28 percent price
increases. Customers north of Seattle face a 35 percent rate now and
probably another increase later. The impact of these rising prices ripples
through our economy: industries have already curtailed operation because
of these rising costs. And Washington is not alone. The Idaho Power
Company recently announced it may increase prices 24 percent, and
some utilities in Utah and Arizona also expect sharp increases.
Independent power producers bought many of the generating plants that
California's deregulation required its utilities to sell, and these producers
were expected to build new plants to keep pace with demand. The legal
obligation of regulated utilities to serve, however, does not transfer to the
independent, competitive generators.
This market structure provides
inadequate incentives to construct new plants — or, worse, perverse
incentives not to generate electricity, since if supplies stay short, prices
will stay at high levels. Independent power producers are realizing huge
profits in this West Coast crisis and stand to continue to do so, at the
expense of the region, through the summer and perhaps into the next year
or two.
Both political parties and both state and federal governments had a hand
in creating the deregulation that has disrupted our power market, and
government at all levels must set aside partisanship as we confront the
results. The Bush administration must help solve the crisis or risk letting it
spin out of control. This is not a "normal" market where the integrity of
price signals needs to be protected. This is a highly distorted market
where intervention is needed. And because interstate commerce is
involved, only the federal government can supply this intervention.
President Bush and his energy secretary, Spencer Abraham, should put
pressure on the Federal Energy Regulatory Commission to stabilize the
market immediately by putting temporary price controls on wholesale
electricity. They should also ask Congress to expand the federal
assistance that helps low-income people pay their electric bills.
California, of course, must work to solve the debt problems of its utilities
and renew the financial integrity of its system. But as it struggles to
restore stability, our entire region needs protection.
Washington State is doing its part. I have issued an energy supply alert
that mandates a 10 percent reduction in energy consumption by all
governments in the state. I've asked for the same reduction by citizens
and businesses. The energy alert also allows companies to fire up their
own diesel generators now, with the requirement that they offset
additional particulate emissions with investments in clean air contributions
later.
We in the Northwest cannot protect ourselves from a crisis we did not
cause and a deregulation experiment we did not want. Even the most
fervent free-market advocates should recognize that there must be
short-term steps taken now to stabilize the market. And only the federal
government can provide the immediate help we need.
Gary Locke, a Democrat, is governor of Washington.
nytimes.com |
