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Politics : Electoral College 2000 - Ahead of the Curve -- Ignore unavailable to you. Want to Upgrade?

To: The Philosopher who wrote (6377)	12/15/2000 1:04:24 PM
From: Ilaine	Read Replies (1) \| Respond to of 6710

I looked at a couple of in depth biographies of Jefferson at Borders last week, but I just don't have what it takes to slog through something like that. My attention span is too short for anything but long articles.

To: The Philosopher who wrote (6377)	12/15/2000 1:04:47 PM
From: chomolungma	Respond to of 6710

Markets Not the Culprit in California Commentary. David DeRosa is president of DeRosa Research and Trading and manages an investment fund. He is also an adjunct professor at Yale School of Management. The opinions expressed are his own. By David DeRosa New Canaan, Connecticut, Dec. 15 (Bloomberg) -- Pundits are weighing in on the deregulation of electricity as the cause for California's energy predicament. The truth is that decades of market interference in California are to blame. The electric utility industry consists of three segments -- generation, transmission and distribution. Generation is where power is created. Transmission refers to the movement of wholesale, high-voltage electricity through a power grid. Distribution is the slicing of high-voltage power into lower voltages and delivery to residential and commercial users. The California Independent System Operator, a public agency, has responsibility for managing three quarters of the transmission system in that state. California's problems are with generation and transmission. What has exacerbated the situation is the phenomenal growth in power use by the state's computer-related industries. For decades, the state has allowed citizens groups, environmentalists, state regulators and other self-appointed stakeholders in the power market to effectively prevent the construction of new generation plants. This is the root cause of the problem: California doesn't have enough generation capacity. No major new power plant has been built in California in 10 years, and most of the existing generators are old and require lots of idle time for maintenance, planned or unplanned. The Golden State now finds itself in the vulnerable position of having to buy electric power from neighboring states. California buys a lot of power from Oregon and Washington. But hydroelectric power output in those states has been compromised by drought conditions. Moreover, demand for electricity in these states has risen because of colder-than- normal weather. Price Controls Mean Shortages To make things worse, the California ISO has a nasty practice of placing caps on the price it will pay for electricity. When market prices exceed the agency's cap, out-of-state utilities refuse to sell megawatts to California because they can get a higher price elsewhere. Is that a big surprise? California can't set the price of electricity any more than it can control the wind and the tides. But it can effectively disconnect itself from the other parts of the Western states transmission grid by forcing price caps. Yet Governor Gray Davis and Senator Diane Feinstein have taken the further counterproductive step of calling on federal regulators to cap the price of wholesale electricity in the Western region. In a joint statement, Davis and Feinstein claimed ``because of California's size, the state is ripe for electricity price gouging.'' Well, how about the other side of the coin? What have the California utilities done to preclude their being ``gouged'' by the so-called ``needle peaks'' in pricing? Why isn't it incumbent on them to make contractual agreements to mitigate the risk of such peaks? Richardson Steps In Enter U.S. Secretary of Energy Bill Richardson, who yesterday ordered the utilities in the Pacific Northwest to deliver power to California. Citing the Federal Power Act, he told the Bonneville Power Administration and the Western Area Power Administration ``to get as much power into California immediately today.'' Whether Richardson has the authority to issue such commands will doubtless end up being decided in the courtroom. The subtlety here is that Richardson may have the right to order Bonneville and Western Area around because they are indirectly under the control of the Department of Energy for some purposes. Yet that authority wouldn't extend to other power sellers. Out-of-state utilities had previously refused to sell to California because of concerns about the financial solvency of the California ISO. They probably don't like price caps, either. Richardson further said the Department of Energy would set the price for this electricity he mandated for California. Get this: Richardson said the price would ``ensure generators receive a fair return.'' The thing that makes electricity different than other commodities is that it can't be stored economically in mass quantities. As such, it is prone to big price swings when generation breaks down, transmission fails, or when demand soars. So there are going to be times when the price of electricity per megawatt hour goes from $30, say, to thousands of dollars. But what Richardson undoubtedly meant is that the electricity that he commandeered would be priced, by him, at something less than the market price. Fair return, Comrade Richardson of the People's Energy Department? How about this for fair: let the Oregon and Washington power generators sell their megawatts wherever they want and at the best price in the marketplace. To do otherwise would be to compromise the long-run best interests of the electricity market. If Davis, Richardson and Feinstein keep this up, the entire West Coast will wind up like California.