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Pastimes : The California Energy Crisis - Information & Forum -- Ignore unavailable to you. Want to Upgrade?

To: Angler who wrote (227)	4/11/2001 9:04:20 PM
From: gamesmistress	Read Replies (3) \| Respond to of 1715

Any comments on this latest "solution" for CA's energy crisis? Calif. Urged to Form Electricity 'Cartel' April 11, 2001 7:21 pm EST LOS ANGELES (Reuters) - California was urged on Wednesday to fight back against a "sellers cartel", blamed for driving up wholesale electricity prices in the state, and form a "buyers cartel" with energy-starved neighbors Oregon and Washington. The call was made in a report co-authored by economist Peter Navarro of the University of California-Irvine and Michael Shames of the San Diego-based consumer group The Utility Consumers' Action Network (UCAN). In the report, the authors also argued that if sellers failed to produce ample power at a price set by the "buyers cartel," California should seize in-state power plants. The report warned that without such action California could face a blackout-riddled summer and some $50 billion in extra costs buying power on the open market. "To avert this disaster, we propose California join with the other 'victim states' of Oregon and Washington to form a 'buyer's cartel,"' the report said. "We propose offering to pay a reasonable price to the (sellers) cartel members -- but not a penny more," it said. Wholesale power prices have skyrocketed in the last year and some blame a group of out-of-state power companies, some of whom purchased plants which the state's utilities sold as part of the deregulation of California's electricity industry. The report named Mirant Corp., Enron Corp., Dynegy Inc., Reliant Energy Inc. and Williams Cos. Inc. as members of the "sellers cartel." "Using their market power, they have demonstrated that they are both willing and able to manufacture artificial shortages," the report said. MERCHANT MARKETERS DENY ANY WRONGDOING Merchant power marketers have repeatedly denied any wrongdoing in California's chaotic wholesale electricity market, arguing that the prices they charge reflect the underlying cost of power generation, tight supplies throughout the region, and the high financial risk of doing business in the state. The report said a fair price would be calculated daily based on natural gas prices and other factors. It would include a generous profit margin and would result in an average price of 15 to 20 cents per kilowatt hour. It noted that the current futures price for the summer was close to 60 cents. "This summer of darkness will no doubt be an orgy of price-gouging by the cartel -- as prices on the wholesale market are expected to double or triple from their already exorbitant levels," it said. California state lawmakers on Tuesday at a meeting in Boise, Idaho pleaded with federal regulators to impose cost-based rates for both electricity and natural gas for the next 18 months in 11 western states. Federal regulators have been reluctant to impose price controls and they are also opposed by many of the inland western states who fear they would cushion consumers rather than give them the kind of price shock needed to spur energy conservation. The chronic shortage of power in West is caused partly by growing demand linked to the region's strong economic and population growth in recent years. There have also been few power plants built during the last decade, partly due to uncertainty surrounding the deregulation of the electric utility industry. Summer power shortages will be exacerbated by a drought in the Pacific Northwest which will severely curtail output from the region's massive system of hydropower dams, which in good years provide about 70 percent of the Northwest's electricity.