Before deregulation, PG&E (in Northern California, I assume the same with Edison and SD) spent a considerable amount on infrastructure improvements. They had previously been criticized for not being prepared for major storms, so they invested a lot in improvements and maintenance, as well as tree trimming, etc.
The Republicans figured that we could set up a market that would have better prices. What they didn't realize is that PG&E was using that 'extra money' for infrastructure improvements and maintenance. So, deregulation could indeed lower costs, but we all know that you don't get something for nothing. The 'saved' money would come straight out of the improvements and maintenance.
Deregulation also worsened the problem by changing some of the safeguards. For example, gas reserve storage that was previously paid for by commercial customers was eliminated, to 'save money'. However, that meant that gas supply was much easier to manipulate. Several companies withheld supplies, and a main supply pipe mysteriously came down for repair, spiking the natural gas prices in the winter of 2000, I believe.
During this period, the average percentage of power plants inside the state that were down for repair went up dramatically. It was obvious what was going on, but it was hard to prove. Only later when employees in the energy companies came forward and talked was it proven that the 'repairs' were blatant attempts to stop the supply from in-state plants that were contracted to sell their energy at fixed prices.
Additionally, the markets were not sufficiently safeguarded from out and out thievery. In a number of well publicized crimes, energy companies sucked PG&E and Edison dry of their cash reserves by manipulating both supply and market prices. Enron, Duke, etc reaped billions from this thievery.
With a gun to our head, Davis was forced to have the state purchase power directly, at these exorbinant prices. That sucked another billions from our last state surplus. Only when the Enrons of the world were exposed as the bandits they are did this manipulation stop.
Since then, Calfornia has brought more than 8 million megawatts of power on line in the state. Although previous supplies were plentiful, they were susceptable to manipulation by out of state energy companies. We need that extra cushion to ensure that "we don't get fooled again". |
