http://www.elsi.org/disaster.htm

Coming soon to a home like yoursIndustry led movements to bring on electric power deregulation are sweeping their away across the nations state legislatures. They promise cheaper power and more choice. Its already started in southern California

Expert Declares San Diego Energy Disaster Area

What goes around comes around. Remember that slogan from Reggie Jackson the baseball superstar of the seventies? "The Big Lie". He was warning us about the drug crisis and the pushers behind it. But now there is another crisis and a new lie. No, this isnt about cocaine or party drugs but about a different addiction. This story is about a new energy crisis and how our national addiction to fossil fuels has kept us from solving it. The new lie? To keep us hooked, theyre pushing the idea that the only answer to our recurrent energy shortages and on going price shocks is more of the same petroleum and its byproducts that got us here in the first place. They might be right, but then you would also have to believe that the answer to a hang over is another beer. For a glimpse into your area's future, look at what theyre saying in San Diego.

Ground Zero

Dateline San Diego, June, 2000. California may have become the marketing battleground for the nations $200 billion a year electric power business as industry led movements to bring about deregulation are sweeping their way across the country. In the space of little more than a few months, for residents of San Diego, electricity rates exploded as the cost of power went from about 4 cents per kilowatt to over 21 cents. Small businesses began to layoff workers. One independent business saw their monthly bill rise from $28,000 a year ago to over a whopping $120,000 this year! A rate payer revolt began and residents were urged, even by elected officials, to boycott their electric bills. Electric power deregulation was now out of the gate.

In the wake of the chaos, hasty action was taken by California officials to avert total meltdown. Temporary price controls were put in place to ease the burden on customers. Proposals were considered to find market solutions for Californias lack of generating facilities and the power shortages that have led to the skyrocketing prices that have left residents breathless as they struggled to keep pace with the barrage of daily power shortages, raging electric bills, rolling blackouts and brownouts.

Still though, as much as things for San Diegos beleaguered ratepayers have changed so rapidly, some things have just stayed the same. The same corporate leaders that promised residents lower prices and more competition, if taxpayers would just give them a $30 billion dollar bailout of their "stranded assets" (which they eventually got), now say that the path to lower rates must be paved with their favorite products, natural gas and gas fired turbine generators. Its gonna be a great deal. Case in point? Consider Californias Otay Mesa power project.

What Glitters is not always Gold

PG&E is asking investors to endorse a multi billion dollar investment scheme, at Otay Mesa, based largely on the assumption that natural gas fired electric powered generation is an economically sound proposition for customers. The plan so far presented, would offer customers and other end users neither an alternative to a source of generation that is vulnerable to supply side disruptions, or a means whereby the inevitable effects of fuel price inflation can be mitigated. They say the 510 megawatt plant should be the cornerstone to the regions energy future.

When donkeys fly. PG&E knows that the cost of the electric power produced by a system of generation is dependent in large part on the cost of the fuel used to produce it. In the case of natural gas, the fuel cost is inherently volatile, subject to the laws of supply and demand, and cannot be guaranteed either during the life span of the proposed project or even next week. Fuel costs have in fact become a major cause of overall economic inflation and disruption. Still, PG&E has aggressively refuted challenges led by proponents of renewable alternatives and concedes no need to offset the risks by providing the region with a balance of energy sources.

But PG&Es rebuttals may be little more than disinformation. Projections show that the total cost to be born by ratepayers, when compared to power produced by renewable alternatives, is favorable for the gas fired system only when little or no price inflation is assumed for natural gas. In point of fact however, natural gas prices have more than doubled during the last year and there is no credible evidence that dramatic price increase will not continue throughout the life of the proposed project. Relying on conventional wisdom though, they say their products are cheaper than the other guys. But are they?

True Costs

Despite the rush to exploit the market created by power shortages in California, some observers think there is a better way to solve the areas energy woes. Local contractor and alternative energy expert Mark Snyder has conducted his own analysis of the situation and has charts and data to prove it. Snyder, a Master Electrician, operates an international electrical company and has provided contract services to San Diego for 22 years. Known locally as a community activist and energy expert, Snyder has appeared on local TV and has participated in numerous hearings and public forums about the region's energy future. Snyder observes,

"People are looking for a way out. The idea that there will be no inflation of fuel costs over the next ten to twenty years is a hard one for people of common sense to swallow. Not only are residents facing the reality of runaway electric bills but we are still in the heels of last winter's oil shock. We still havent seen the end of the skyrocketing prices for gasoline and many credible sources are warning about home heating fuel shortages for the coming winter."

In truth, natural gas prices are under considerable pressure with widespread shortages deemed likely this winter. The price for natural gas, even with an industry that is heavily taxpayer subsidized, has more than doubled over the past two years and demand has exceeded "high case" projections made over a decade ago by U.S. Department of Energy studies and other analysts.

Snyder wonders how proponents of the industrys nationwide plans to convert to natural gas fueled electricity generation can lead to lower prices for customers. Says Snyder,

"People ask me how the price of solar power compares to the present cost of electricity produced from natural gas. The problem is though that although we can tell you how much it would cost you to power your home for the next 25 years with solar, no one knows what the cost of fossil fuel generation will be over the same period. They dont even know what it will be next week."

But what about the cost of Solar? Because there are no fuel costs with solar electric or for that matter with many other forms of renewable energy production like wind or small hydro, the price of the power produced is not subject to the effects of inflation. The cost of the power is just a function of the cost of the materials and labor used in the installation process.

Bottom line. Says Snyder,

"When the cost of electricity by the kilowatt hour for a large solar project is compared with cost of operating a plant like the one proposed for Otay Mesa, the actual costs after taking the likely inflation of fuel costs into consideration, are roughly comparable."

Portfolio Balancing

The first rule of investment is "dont put all your eggs in one basket". It is a well known fact among investment professionals that the best way to spread risk is through portfolio diversification. Thats just common sense. No doubt the management leaders of our major corporations practice these principals in the administration of their own companies. Where the public is concerned though, if the same principals are not also embodied in a proposal to invest in the energy future of their customers, a plan without balance is just a plan for failure. Says Snyder,

"America needs energy. But if the costs of fuel cannot be contained the results will be misery. San Diego is an energy disaster area. The experience here may just be a warm up for coming rate shocks all across the country."

Snyder says that best way to contain the rising cost of electricity driven by escalating fuel prices is to ensure that as much of possible of a customers energy consumption comes from renewable sources. He says that although the front end cost for renewables may be higher than with conventional power, since they dont consume fuel, they are likely to be more cost effective over the long haul, as his graphics show. Simply put, the more we are able to derive our energy from renewables the less we have to spend on costly fuels. And of course there is always that other benefit that comes with the use of renewable power; clean air. Snyder points out,

"Clean air is not just a nice byproduct it also translates into lower health care costs and a better quality of living. As a cancer survivor that really means something personal to me"

In the meantime, California's other giant utilities have told legislators that the surging customer bills of San Diego could spread to the rest of the state as early as next year. Snyder feels that the time is now for grassroots efforts to be directed at the California legislature. He says,

"The utility monopolies have already put California on notice that the disaster in San Diego is no fluke. Elected officials need to recognize that this is nothing less than a full blown state of emergency. Smoke and mirrors aren't going to help."

Snyder says that legislators need to step up and make sure that subsidies for the development of renewable power are extended beyond their present level. He adds,

"They showed no reluctance to throw billions of tax payer dollars at the monopolies for no other reason than to make them more profitable for private investors. There is no reason now that they can't step up and do what is right for the residents."

The problem though doesn't just belong to California. Hidden costs, potential shortages, and price uncertainty not withstanding, the nations giant utility monopolies have decided to bet our future on a new infrastructure powered by natural gas. They are already free to reach into their deep pockets to use both media and lobbyists to tout their product as if it will do everything from single handedly solving the nation's energy challenges to waxing your floor.

And get ready. Deregulation is coming. The silver lining for the nation's giant investor owned utility monopolies of course, is not in more competition, a cleaner environment or even securing the lowest price for customers. Instead, for the monopolies that continue for now at least to dominate the nation's huge electric power industry, it is the expectation that they will stay on top by finding new ways to generate an ever greater cash flow by selling their one size fits all product at any price to a captive public.

Of course the rate shocks in San Diego weren't bad for everybody. Sempra Energy, the holding company for San Diego Gas and Electric, posted an unprecedented 34% jump in quarterly profits during the same period. But perhaps to the consternation of powerful monopolies, deregulation is a potentially double edged sword. If deregulated markets are not only free but fair, more and more customers can exercise a choice, spread the risk, and opt to have their electricity produced, in large part, from clean renewable sources no utility company can ever own.

We have always known that using renewable energy is a good idea. But now with the days of cheap, abundant fossil fuels increasingly becoming a thing of that past, renewable energy is more than just a good idea; it has become a necessity. The big lie then? Someone wants us to believe that its just not affordable for us to do so.

Join our egroup: Click to subscribe to "Electricity Deregulation" http://www.egroups.com/subscribe/electricityderegulation

-- Stuart H. Rodman (jrodman527@aol.com), September 23, 2000

Answers

Where we live, we pay .23 per kwh....actually, the rate is lower, but they've found some fancy terms to add on and charge us for:

capacity surcharge adjustment, firm capacity surcharge, interim rate adjustment, energy cost adjustment, irp cost recovery.....

-- Margo (margos@bigisland.com), September 24, 2000.