Be glad you're not chilly in California

greenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

Be glad you're not chilly in California Source: The Fort Worth Star-Telegram Publication date: 2000-12-11

For energy consumers - and that's all of us - there's grim news being generated coast to coast. In Washington, D.C., the Energy Information Administration is warning Americans that winter heating bills for homes heated by natural gas could jump 50 percent over last year.

In California, the electricity market is totally out of whack, thanks to misguided government policies, extremely tight power supplies and unusually cold weather. In some cities, residents are being asked to unplug Christmas lights.

In Texas, rising energy prices were considered a boon in the days when the oil and gas industry accounted for roughly a quarter of the state's economic output. But that's no longer true, with the industry's role now greatly diminished.

In case you haven't noticed, natural gas prices have been going through the roof lately. Prices have soared to record levels, exceeding $9 per million British thermal units in some trading.

Demand is up because of colder weather and increased use of natural gas to generate electric power. But supplies are down, in part because the drilling of new gas wells nose-dived in recent years when energy prices were low.

That boils down to sharply higher prices if your home is heated with natural gas.

But you don't get off the hook if you have an all-electric home and are a customer of TXU, the chief power provider in North Texas. About 30 percent of the juice that the utility sells is generated by burning natural gas.

TXU has 2.6 million residential electric customers and 1.4 million residential gas customers, all of whom will help underwrite the company's increased fuel costs when they pay utility bills this winter.

North Texans depressed by all this should be thankful for one thing - that they don't live in California.

Natural gas prices have skyrocketed there, and electric power supplies are incredibly tight (unlike in Texas, where we're in relatively good shape in terms of supply and demand).

In California, statewide power shortages are creating bizarre situations, like the one explained to me by an official at a 10,000- student college north of Los Angeles.

I had read a Los Angeles Daily News story outlining the plight of College of the Canyons, located in Santa Clarita. But the electricity cost figures cited in the story were so incredible that I telephoned the college to verify them.

Yes, spokeswoman Sue Bozman assured me, the figures were correct. Under normal conditions, the college pays 6.2 cents per kilowatt hour to Southern California Edison for its electricity. But the school lately has been shelling out $9.01 per kilowatt hour - a rate 145 times higher - to keep its power on in times of peak demand when the utility asks large customers to shut down or pay a premium rate.

Those excess charges have added $116,000 to the college's electric bills this year, forcing the school to dip into reserve funds to keep the lights on.

The contract was a good deal for the college in earlier years, when California had an ample electricity supply and there was no need for shutdowns. But wrongheaded government policies and other factors led to a situation where few generating plants were built in California in recent years, thus creating power shortages amid a growing population.

Electric deregulation should proceed much more smoothly in Texas than it has in California - but any benefits of deregulation here might be outstripped by a sustained increase in natural gas prices that would raise costs for power generation.

If energy prices soar this winter, there will be a fresh clamor in Washington for a new "national energy policy." But what we most need are consistent policies that help us avoid the extremes of unbearably high or exceptionally low energy prices.

We don't want another oil bust, a la the mid-1980s. But we don't want to pay $9 per kilowatt hour for electricity, either.

Jack Z. Smith is a Star-Telegram editorial writer and columnist. He can be reached at (817) 390-7724 or jzsmith@star-telegram.com.

http://cnniw.yellowbrix.com/pages/cnniw/Story.nsp?story_id=16485425&ID=cnniw&scategory=Energy%3ANatural+Gas

-- Martin Thompson (mthom1927@aol.com), December 12, 2000


Moderation questions? read the FAQ