Re: Phony deregulation - Fwd: James Bennett's UPI Column for01-26-01

From: Michael Lorrey (
Date: Sat Jan 27 2001 - 11:51:14 MST

Harvey Newstrom wrote:
> At 9:32 PM -0800 1/26/01, wrote:
> >Russell forwards a column by James C. Bennett:
> >> In California, some dim bulb (so to speak) had the amazing concept of
> >> deregulating the prices power companies would have to pay to power
> >> suppliers for their power, without deregulating the price at which they
> > > could sell power to consumers.
> >From what I've read about the crisis, this is not why the price freeze was
> >put into place. It was actually done to benefit the utility companies,
> >to guarantee them profits. At the time of deregulation wholesale prices
> >had been low for decades, and the reason for deregulation was to bring
> >down retail prices, which had remained stubbornly high.
> I agree with your analysis, as far as I can tell.
> What confuses me about this crisis is all the blame on NIMBYs and
> environmental laws for causing the problem. The talk of opening up
> Alaska and Florida oil drilling also confuses me. Although these
> might be worthy issues to discuss, they have nothing to do with the
> current crisis. The problem is not being caused by a shortage of
> power plants (caused by NIMBYs) or lack or oil (caused by
> environmental restrictions on drilling). The problem is a shortage
> of money. The power is there, but nobody will pay for it. End-user
> prices don't cover the cost of the electricity. The utilities are
> bankrupt so they can't pay.

No, Harvey. California is in a power deficit. It must import power from
other regions. There are few, if any, areas of the US that are now in a
power surplus. We are importing lots of power from Canada and Mexico at
huge rates, and there is an ongoing legal battle between Vermont
utilities and Hydro-Quebec over contracted pricing. The Vermont
Utilities Board has been trying to prevent rate hikes to reflect actual
costs, while at the same time refusing to let the Vermont Yankee nuke
plant be sold for the lower amount that was offered, they want it sold
at auction to a utility that will pay more for it with bond money that
must be paid back with higher rates. Because state utility boards are
under seige from green and PIRG interest groups mobilizing NIMBY'd
people, local new power generation is being built at a lower rate than
at any time in the last 50 years while demand growth is growing faster
than at almost any time. California is simply the opening battle in what
will be a continent wide crisis that will blow up in the next 1-3 years.
By next fall weekly outages will be commonplace across the country.
> The California utilities had their power cut off because they failed
> to pay their last bill. Utilities in other states who can still pay
> for power are still getting it. When President Bush ordered the
> other states to not cut off power, the power came back on. There is
> no lack of power. There is a lack of solvent utility companies.
> There is no question about how to get the power back on. The only
> question is who is going to pay for it.
> --
> Harvey Newstrom <>

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