California Hurts For Electricity

The State Is Dangerously Short Of Power, Utilities Say Skyrocketing Demand And Relaxation Of Controls Consumers, Politicians Demanding Action

SAN FRANCISCO, Sept. 13, 2000 (CBS) As temperatures climb above 100 degrees around Los Angeles, Californians are being warned the state is dangerously short of power. The shut-down for repairs of part of a nuclear plant that supplies 1 million customers is making the situation worse.

In San Diego, the first city in the nation where electricity has been freed from price controls, the bills have been shocking, CBS News Correspondent John Blackstone reports.

"Truly in San Diego, the Cost of Living Index has turned into a cost of misery index," said Michael Shames, a consumer advocate.

Consumers call it "price gouging." The anger in San Diego may be a warning of things to come, as 25 states push forward plans to deregulate electric utilities. Deregulation was supposed to bring prices down, but in California the wholesale cost of electricity has soared from $25 a megawatt to $250 a megawatt at times of peak demand.

It's an increase that has some lawmakers outraged.

"This is not an issue about supply and demand and markets not working. This is criminal activity by a bunch of folks who decided to gouge us for anything they could get," said state Rep. Bob Filner, D-San Diego.

An array of San Diego politicians, consumer advocates and utility officials pressed federal regulators this week to impose wholesale electricity rate caps and issue refunds to consumers to help ease the shock of skyrocketing power prices this summer.

Members of the Federal Energy Regulatory Commission refused to submit to pressure for quick action, but facing the ire of more than one million San Diego Gas & Electric customers, commissioners indicated they will act at some point on behalf of those suffering.

"We're prepared to do whatever it takes to help consumers in San Diego," said FERC chairman James Hoecker.

Consumers in San Diego have seen their bills rise 200 to 300 percent but still the state faces electricity shortages and the threat of rolling blackouts, says industry critic Nettie Hoge.

"That's the problem that allows free market exploiters to come in and demand the highest price possible," said Hoge, a member of the Utility Reform Network.

The two other investor-owned utilities in the state, Pacific Gas & Electric and Southern California Edison, are still under a state-imposed rate cap, exempting customers from bearing the full brunt of rates, which have reached 21 cents a kilowatt hour in the last month.

In the theory of deregulation, those high prices will encourage electricity suppliers to build new plants to generate enough power to meet the demand at a reasonable price. But can California survive another summer like this one?

"If this keeps going for two and three years, which is what people suggest would be the minimum amount of time to build new capacity, the states going to be in an economic shambles," said Hoge.

In the midst of deregulation, the power lines in California may as well be tightropes, with the electrical grid balancing on the edge of failure and the whole future of utility deregulation in question.

http://cbsnews.cbs.com/now/story/0,1597,221065-412,00.shtml

-- Martin Thompson (mthom1927@aol.com), September 13, 2000

Answers

I don't see where ending deregulation is going to do any good. If fuel to run the plants is in short supply, it's in short supply. That's all. Once again, I feel the politicians are fooling themselves.

-- R2D2 (r2d2@earthend.net), September 13, 2000.