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Politics : Libertarian Discussion Forum -- Ignore unavailable to you. Want to Upgrade?

To: The Street who wrote (4568)	12/21/2000 8:40:17 AM
From: Don Lloyd	Read Replies (1) \| Respond to of 13060

The Street - It's sad how believable this hoax is. Regards, Don

To: The Street who wrote (4568)	12/21/2000 8:49:00 AM
From: Pat W.	Respond to of 13060

I want this to be an urban legend joke, but there really is a Pacoima, Calif., and there really is a Telfair Elementary School. pacoima.net Can't find an Armageddon, though. Katy Winchester at the Enfield school was a nice touch.

To: The Street who wrote (4568)	12/21/2000 9:02:47 AM
From: Mama Bear	Respond to of 13060

<edited> Regards, Barb

To: The Street who wrote (4568)	12/21/2000 11:05:50 AM
From: freeus	Read Replies (1) \| Respond to of 13060

I read the replies to this: it's amazing that Americans, especially the fairly intelligent ones that are on S.I. donot realize that these incidents are happening all over the country. Blinders blinders blinders. And on electricity:WALL ST JOURNAL December 20, 2000 Business World "How to Stop the California Meltdown" By HOLMAN W. JENKINS JR. Last week California came within hours of rotating blackouts. The state's two biggest utilities are tottering toward insolvency, thanks to billions laid out to keep energy flowing to ungrateful consumers. So much water is being drawn down out of the Pacific Northwest that salmon nests are being stranded and the stage set for greater catastrophes when air conditioning season hits next summer. A first-class train wreck is under way, and there's only one solution, jack up rates to stop consumers trying to burn more power than the state can beg, borrow or steal. The big mystery is when Gov. Gray Davis will summon the courage. The feds can't save his bacon. Last week Energy Secretary Bill Richardson, a fellow Democrat, dutifully ordered Western power suppliers to ignore their own credit disciplines and keep selling to the state. But Mr. Richardson can't whistle up power where it doesn't exist. The California governor also tried the Federal Energy Regulatory Commission, the obscure agency that oversees the wholesale power market. Last week he demanded that members slam down price controls across the West and force power marketers to disgorge their profits. This might have capped the state's immediate costs, but nobody would ever have been willing to build another power plant to serve California. On Friday, the agency declined to authorize anything so ill-advised. "In my view, competition has not failed in principle because it was never well-conceived or fully tried," FERC Chairman James Hoecker wisely said. Back to you, governor. Mr. Davis is no idiot, but the history that got him here didn't necessarily outfit him with the right instincts. He floated upward in his political career seemingly without controversy. The Los Angeles Times once pegged his appeal: He never does anything to make voters mad at him. Lately this has even gotten him mentioned by Stop-Hillary Democrats as a presidential prospect in 2004. But it's too late. He's toast. He just hasn't popped out of the Procter-Silex yet. Circumstances bring an end to all political careers sooner or late. Sometimes that's the price of being the guy on the hot seat when the hard choice comes along. His duty has been clear since last summer, even without benefit of an economics textbook. Thanks to a quirk in the law, San Diego Gas & Electric escaped early from the rate freeze that accompanied the 1996 "deregulation" act. The utility was able to pass along its runaway costs, and consumers responded as per the textbook, curbing their usage. Industrial and commercial customers installed generators to produce their own peak supply. Households flipped off lights, cooked with propane, and generally developed a healthy paranoia about running up their power usage when bills were triple what they had been a year before. Sure, it's not ideal, but better than letting the system crash. Elsewhere in the state the "crisis" is still something consumers read about in the papers, with lights blazing and Regis blaring out of three TVs. Unfortunately, Mr. Davis is treating the problem as a log-rolling exercise, quietly promoting a pussywillow of a rate hike, 10%, in return for utility shareholders swallowing half the overruns. But the primary problem isn't parceling out the damage. California needs to hit consumers with enough of a price signal to bring demand back into line with supply, and quickly. Ten percent may be all his margin of political survival will stand (he's up again in 2002). But it probably won't drop enough of a hammer on consumption unless the economy falls off a cliff at the same time (something he'd be loathe to admit he's hoping for). Let us leave him to his dilemma and extract some lessons for other deregulators around the country. California thought it had enough surplus capacity that it could worry about perfecting the long-term market later. It wanted to extract rock-bottom prices from its existing generators, so the state-run Power Exchange put them all in the position of bidding against each other in an oversupplied market. This essentially was a formula for sticking up owners of power plants, but with demand growing at 8% a year, the tables quickly turned. By last summer, when the first blackouts threatened, power marketers were getting top dollar for every electron they could spare. Prices surged to $1,500 per megawatt-hour, 50 times higher than normal. As for freezing consumer rates, that was a trade-off for letting the utilities impose a special charge to help them pay off their otherwise unrecoverable investment in nuclear plants. But the freeze ended up encouraging consumers to go hog wild, oblivious to the real cost of power. Not all the state's bad luck was self inflicted, of course. Natural gas prices have jumped 25-fold since last year (half the state's power is produced by gas). And the dot-com economy has consumed gobs more power than anybody could have anticipated. But these hiccups would have been surmounted more easily if policy had been less farcical. If there was a failure here, it was a failure to recognize that electricity is more than a commodity. It's also a service, with a large percentage of customers (including all homeowners) paying not just for the power they use but for the utility to stand by with enough supply to meet their requirements at all times. Yet because the utilities were forced to sell their own power plants and buy all their supplies one day in advance on the state-run Power Exchange, they lost any ability to structure their own supply relationships to match the demands of their customers. This was wacky. It's no derogation of the "free market" to seek to avoid dependence on short-term commodity prices. Lesson for other deregulators: Protect the property rights and freedom of contract of utilities. Let them own plants, buy under contract or shop the spot market as makes sense to them. That's the only way to keep supply and demand in balance for the long term. URL for this Article: interactive.wsj.com