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To: Second_Titan who wrote (85190)	1/24/2001 12:26:20 AM
From: Zeuspaul	Read Replies (1) \| Respond to of 95453

Watson said that when the white papers are written about the California power crisis, many will see it was a California problem and not a problem with deregulation. Deregulation may not be a direct cause of the power crisis. However there is NO WAY California would be in its current situation if its utilities were still regulated. They would have long term contracts for juice and they would have their own generating capacity. If deregulation isn't the cause it sure is the most significant contributing factor. That's not to say the legislature didn't screw up royally. They made two BIG mistakes. The first was to mess with a working power system. The second was not knowing how to deregulate. If they hadn't made the first mistake they wouldn't have made the second mistake. The producers are not claiming that there is a problem with the wholesale price they are receiving for the juice. So where's the juice? The market now does the planning and there is a market in wholesale juice so where's the juice? In Bergstrom's position I wouldn't blame the problems on deregulation either....why bite the hand that feeds you? California IS paying the higher cost of energy. The Power producers are getting the higher cost. The utilities are paying (Californians will pay one way or the other) the higher wholesale cost. So what is the gripe? Why wouldn't a power producer want to continue producing power at the current rate? As demand increases prices rise and profits increase. Where is the incentive to produce more? Prices the producers receive have been deregulated for four years. How long does it take a power producer to increase production to meet demand? Prices were low so they didn't increase their capacity because there was no market incentive? Four years of deregulation should have been enough time for the deregulated industry to rise to the task. They aren't planning ahead because there is no incentive to. The argument goes that since consumer rates were not yet regulated the supply demand curve did not come together. Maybe true but to make it come together would have meant prices went up and demand went down due to higher prices. Good logic...all that means is the supplier doesn't have to increase supply...just sit back and as demand increase the price goes up and profits rise...not bad for the power producer. Then just blame the consumer for using too much juice. Then pit one state against another as they grabble for the crumbs. You guys fight over what we got cause it's all your gonna get...let the highest bidder win. But wait a minute. The demand isn't going up because the individual consumer is using more juice. The demand is going up because the population is increasing. This is simple demographics. You don't need to be a rocket scientist to figure the demand for juice will be more next year than it is today. So where's the juice? Four years isn't enough time to build more power plants? How much time do they need? LADWP offered to build a coal plant for California in UTAH. The offer was to have it up and running in two years. Maybe they are off a year but that still puts them a year ahead of a four year lead time. The wholesale market IS deregulated and where's the juice?? The argument continues that California isn't building enough power plants. Well in this new system California isn't supposed to build power plants. The power producers are supposed to build the power plants. They don't have to build them in California. There are other states where it is easier to get permits to build plants. It is the feds that have mandated California reduce the pollution in the LA basin....California plays a role too. The hazzards of pollution is not what comes out of the stack. Pollution is based on concentrations of what comes out of the stack. Some locals are better suited to power plants than others because the atmospheric conditions are better suited to dispersal. That's not to say California doesn't have locals to site power plants. Nine plants have been permitted , five are under construction and three are scheduled to be completed this summer. It may not be enough but power plants are being built in California. Does a California private power plant have to sell the juice to California? As far as I know they can sell it outside the state. Plants in Utah can sell juice to California and plants in California can sell juice to Utah. As far as I know in the deregulated market the juice can be sold to anyone. So where is the plentiful supply of juice that the market forces should have delivered? If there is a demand that could have easily been predicted then why weren't more power plants constructed wherever and as necessary to meet the demand? If LADWP.. the little old California City utility can predict power usage in advance and build plants in California and elsewhere then why can't the market inspired producers do the same? The demand and supply curves will come together in a deregulated market. That does not mean a deregulated market is the best solution to our energy needs. Low cost energy is like low cost money to a business. If we supply low cost energy to our industry it will prosper. The US has plenty of energy if one considers coal in the mix. The lack of planning is the reason we don't have enough juice. If the market can't produce enough juice after four years then there is no reason to believe that four more years of market based planning will result in plentiful supplies at low cost. Zeuspaul