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

To: portage who wrote (516)	6/14/2001 12:27:38 PM
From: DavesM	Respond to of 1715

Portage, The gaming goes in both directions. The Governor was threatening to use emergency state power to just take power plants from the same people he was negotiating with for long term contracts. The AG was openly stating that he'd like to throw the Chairman of Enron in Jail to be raped (before an investigation is even done)-while the state is trying to get the best price it can for long term contracts. The Governor, and both Senators were pushing HARD for federal price caps while negotiating for contracts. Please don't harp too much about the FERC and Governor Wilson. The majority of the FERC are still President Clinton's appointees - only ONE was in favor with price caps. I don't recall that the top elected Democrat official in the State was opposed to the deregulation plan (at the time) either. Of the plants that are set to go online this year, I bet all of them started the approval process TWO years ago (a year before the crisis). The responsible partys to this crisis are just about every elected and appointed State Official (with responsiblity over power). There was just a case of Statewide stupidity in 96, and a refusal to face facts till 2001. One thing about this crisis, it looks like its bringing the % rate difference between western states closer together : ) ...Sorry Ray, couldn't help myself.

To: portage who wrote (516)	6/14/2001 12:51:18 PM
From: Hawkmoon	Read Replies (1) \| Respond to of 1715

How is that speculation? It's no different than putting increased mileage on an 18 wheeler in order to meet immediate transportation requirements (shortage of transport capacity.. etc). So the trucking companies defer regular maintenance in order to keep those rigs on the road. This skews the figures downward for "maintenance downtime" leading folks to believe that these rigs have suddenly become less maintenance intensive. But as with all equipment, especially that which is very old, there will come a time when YOU MUST TAKE IT DOWN for maintenance. And not just regular maintenance, but a full-blown overhaul due to the lack of preventive maintenance over the past several years. It's like not taking the time to change the oil in your car for 3 years. Suddenly the statistics show that your maintenance downtime hours and expenditures have been reduced. But when you find you've inflicted major damage on your engine by deferring the changing of oil, you face major expenses and downtime. This is more than speculation.. It's is reality. And an even greater reality is that many of these generators probably don't mind "blowing" these plants up, because they are so old and inefficient they want to replace them with newer, more profitable plants. But where can they come up with capital, as well as the political support to overcome the NIMBYs and AWBH wackos?? Could a crisis, either produced as a result of putting their plants into overdrive and deferring maintenance, or induced by shutting down generators, be the answer that break the political log-jam that has crippled the utility sector?? Either way, power generation is capital intensive, and every 40 years or so, we'll have a energy crisis that provides the capital necessary to achieve a massive expansion of the infrastructure. And only having a potential 5% ROE when determining the cost/benefit of building new generation capacity is a real deterrence to such capital spending. I could have put that money into T-bills and received a better return, with little risk. It's amazing to me how people care so little that companies like MSFT regularly glean 50% profit margins on their products, but begrude the utilities making 5-10% return. Look at XOM... They only generate a 7% profit margin. biz.yahoo.com How about Reliant Energy? A 2.2% profit margin!!! biz.yahoo.com How about Duke? A 3.3% profit margin!! (and that ROE is one of the highest because they own several Nukes) biz.yahoo.com How about AES? A 9% profit margin. biz.yahoo.com And what about the power trading "anti-christ", Enron?? An underwhelming .08 percent profit margin on $158 Billion in sales. (not hard to double profitability when you start out from zilch) biz.yahoo.com And those nasty folks over at El Paso? A decent 9% profit margin... biz.yahoo.com Now compare them boys to MSFT 40% profit margin!!! biz.yahoo.com Or what about ORCL?? A HUGE 60% PROFIT MARGIN!!! biz.yahoo.com Or JNPR... 21% profit margin!! biz.yahoo.com Why aren't people so outraged about the extortionary profits those guys make?? Why are these tech companies being permitted to exploit the relatively cheap power infrastructure, increasing the overall load on the grid with their server farms and data warehouses and fiber optic amplifiers and switches, with no corresponding increase in generating capacity in the electrical grid?? It's all a matter of perspective Portage... The next several years will be a time for the energy infrastructure to play "catch-up" with the explosive growth in information technology. Btw, I'm one of those people who don't believe that mankind is the main culprit in global warming. Volcanic activity is tremendously destructive to the Ozone layer. And we know the Earth has had periods where it has MAJOR climate extremes LONG before the Neanderthals ever built a fire. (remember that ice age?) There may be nothing we can do to stop it, or it may actually require human meddling to offset these natural changes (with unknown effects) to prevent Mother Nature from screwing up her own ecosystems. We may have to salt the oceans with iron oxide dust to create algae plums that reduce CO2 levels. We may have to dump salt off of Nova Scotia and Greeland in order to maintain, or increase the salinity of the water that drive the oceanic conveyor that drives so much of our climate. Are you willing to make these kinds of direct interventions into the natural climate changes driven by M-N herself? Something to think about before all those Methane Hydrates that lurk under the ocean depths become so warm that they begin to melt. Methane is, after all, a MAJOR greenhouse gas. Hawk