California Unplugged
Tucker, William
I In 1986, on a sunny afternoon in May, officials of the Pacific Gas & Electric Company cut the ribbon on Unit II of the Diablo Canyon Nuclear Power Station, halfway between San Francisco and Los...
...Freeman has won praise for instituting "Green Power for a Green Los Angeles," which "marries renewable energy sources with energy efficiency measures," balancing power with environmental concerns...
...Actual 1999 growth was 8 percent and demand in Silicon Valley rose 12 percent in 2000—the fastest rate in the nation...
...FERC urged the states to follow suit, deregulating their own retail markets...
...Almost a quarter-century ago, California officials became entranced with the idea that the centralized generation of "Deregulation is not the issue...
...Within a month, the Independent System Operator (ISO) found itself buying one-third of California's power at prices up to $1,000 per megawatt-hour— 15 times what the utilities could charge their customers...
...California leads the world but has only 14 stations generating 413 megawatts—less than 1 percent of the state's needs...
...A pattern emerged...
...State regulatory authorities had long kept electrical prices low to consumers...
...As Karl Stahlkopf, vice president of the Electric Power Research Institute in Palo Alto, points out, "Because the utilities couldn't avoid buying this power, they often displaced their own lower-cost generating sources...
...Instead it would be replaced by a "distributed" system of generation that would be anchored by much smaller industrial "co-generation" plants...
...By the spring, month-to-month peak usages were up 21 percent over 1999...
...THE AMERICAN SPECTATOR ¦ April 2001 33 Ratepayers saved $1 billion in electrical bills...
...Hailed as a "visionary" and a "wily old pro," the 74-year-old Freeman was Davis's selection to negotiate the state's long-term contracts with independent producers...
...As late as 1998, the California Energy Commission forecast annual growth of only 2.3 percent through 2004...
...The power plant capacity simply isn't there" tors to keep the lights on...
...Too much energy was wasted in generation and transmission, the energy that was delivered did not fit the scale of end-use, fossil fuels would eventually run out, and the whole system was brittle, complex, and vaguely inhuman...
...Amory Lovins and their goat...
...That's just what happened...
...Their main criterion is to locate at the intersection of natural gas pipelines and the electric grid...
...By 2011, California taxpayers will still be paying for electricity consumed in 2000...
...Unemployment stood at 10 percent...
...The hops crop and vineyards occupy about 40 million acres...
...Most of the significant additions to the Golden States grid have come from small co-generation plants at large industrial facilities...
...The utilities would be required to buy electricity from QFs at "avoided costs"—what they would have incurred in building new plants...
...Yet by forcing the utilities to pay inflated prices to Qualifying Facilities, the state was swapping cheap for dear...
...would produce roughly one-third of the present gasoline requirements of the United States...
...From 1986 to 1996, the states per-capita consumption had declined steadily...
...In 1991, residents of the Sacramento Municipal Utility District even voted to close down the Rancho Seco Nuclear Plant, though it still had years to go in its life cycle...
...As time passes, it's getting harder and harder to see why...
...One state embraced it fervently...
...San Diego Gas and Electric (SDG&E), the state's third major utility, actually retired its stranded costs in July 1999 and entered the free market...
...PG&E and Southern California Edison had stopped paying bondholders and creditors and were essentially bankrupt...
...President Jimmy Carter donned a sweater, sat in front of a fireplace, and urged Americans to engage themselves in a battle he called the "moral equivalent of war...
...But in 1976 Amory Lovins, already the youngest faculty member in the history of Oxford and British representative of Friends of the Earth, published "Energy Strategy: The Road Not Taken...
...In 1996, California took the plunge...
...The PUC set our avoided costs very low so it wasn't economical for independent producers to approach us.They all went over to Southern California Edison...
...Lovins himself endorsed a "fluidized-bed" coal system and speculated it could be employed at the household level...
...The secret of LAPWD's success is that it still gets 50 percent of its power from coal plants in Utah, Nevada, and Arizona plus 10 percent from the Palo Verde nuclear plant near Phoenix...
...The Lovins school of distributed energy, however, still claims all this is unnecessary...
...It's 100 windmill farms the size of the state's largest installation in the Mojave Desert...
...A cover story in New Times called Lovins "The Pied Piper of Alternative Energy...
...The government extended oil price controls, imposed an "excess profits tax," initiated a synthetic fuels effort, set up the strategic petroleum reserve, and funded various experiments in alternate energy The Synthetic Fuels Corporation limped along for almost a decade, trying to turn coal into gas and tar into oil until the whole effort collapsed of its own weight in 1985...
...The earliest versions also killed birds, including 50 hawks and golden eagles that died in the blades of a wind farm at Altamont Pass...
...When Lovins briefed Jimmy Carter on energy at the White House in 1978, he found the president had already read the book...
...Texas relies on coal, nuclear, and natural gas and also exports...
...Powered by natural gas and utilizing the waste steam from their boilers, these co-generation plants produce efficiently and also save on transmission losses...
...The Internet is a vast, highly tuned electronic network of servers, switchers, and routers that are always on and require extreme reliability and lots of power...
...That spring morning fifteen years ago was the last time a central generating power station of more than 380 megawatts was added to the California grid...
...Locals dislike the air pollution...
...By 2000 there were 2 million...
...As permitted, SDG&E passed these prices through to its customers...
...But in terms of matching wits with some MBA who's got a Ph.D...
...Total world output of new equipment each year is enough to produce only 150 megawatts at a forbidding cost of $200-300 per megawatt-hour...
...In many states, stranded costs were aging coal and nuclear plants...
...California now imports 20 percent of its electricity—25 percent during peak demand...
...He adds, "These plants improve reliability because having a 500-megawatt plant go down isn't as bad as losing a 1,000-megawatt plant...
...The utility even had surpluses to send San Francisco—but couldn't because transmission lines were inadequate...
...With a concerted national effort, we THE AMERICAN SPECTATOR ¦ April 2001 31 could create our own OPEC simply by tapping these unused resources...
...For some reason, regulated utilities always bring out the sadistic impulses in politicians, just as tethered elephants bring out the sadistic impulses in small boys...
...The rest of the country went in a different direction...
...Unnerved, the PUC finally relented...
...a landmark article in Foreign Affairs, which argued that the root cause of the problems was the centralized generation of electricity...
...Even as the disaster unfolds, environmentalists continue to predict that the days of centrally generated electricity have passed and we will soon be living off back-yard generators...
...As Daniel Yergin, author of Energy Future and co-founder of Cambridge Energy Research Associates pointed out, "Deregulation is electricity—the system of building large generating stations and distributing power through electrical transmission lines—was becoming outdated...
...you can put on a sweater and go next door...
...Because commitments to the first may foreclose the second, we must soon choose one or the other—before failure to stop nuclear proliferation has foreclosed both...
...Meanwhile, the "oil shortage" magically disappeared when President Reagan decontrolled prices in 1981...
...The current situation was planned from the beginning...
...soft path renewables...
...In 1995 fewer than a million Americans were hooked into the Net...
...Some states ignored the program...
...Taking a hardheaded approach, Lovins argued that markets would favor the soft path and that utilities should be forced from behind their regulatory curtain...
...In its aggressive attempt to implement the soft path, the California Public Utilities Commission set the "avoided costs" of new thermal plants extremely high...
...Meanwhile, factories and retail stores were installing $250,000 backyard diesel generanot the issue...
...But in a seller's market, everyone's prices would be driven up...
...The rest of the country does not...
...But all this begs the question: How did the state's power supplies become so inadequate in the first place...
...Biomass" plants burn garbage, essentially, or any other organic matter...
...By 2025, we could be living in The efficiency of electric motors had hardly improved since the 1920s...
...Homes, schools, and stores will gradually kiss the grid goodbye, with generating stations serving mainly industry...
...Thus, he favored deregulating prices at both the wholesale and retail levels— the one peice of advice that California was never willing to take...
...But notice Lovins doesn't bother to calculate the required flow of organic materials through the system...
...This "small-but-beautiful" system would eventually atomize into a world where almost everyone would supply their own electricity through backyard fuel cells, windmills, or solar panels...
...Up to that point air pollution and dwindling fossil fuels seemed to be pushing the nation toward a nuclear future, supported by, among others, the Sierra Club...
...If the electrical grid fails, there is nowhere else to go and not much you can do about it," he wrote...
...By February, SDG&E had bled $605 million...
...Another 30 percent comes from natural gas plants around Los Angeles that are mostly 40 to 50 years old...
...Altogether, PG&E has spent $1.3 billion on conservation since 1976, displacing 2,300 megawatts of new power—a relative bargain...
...Thus a conversion industry roughly ten to fourteen times the physical scale (in gallons of fluid output per year) of US...
...It was a nightmare to build but it's been a dream to operate," says Jeff Lewis, plant spokesman, today Purring along at close to 95 percent capacity and completely immune to oil or gas prices, Diablo Canyon now produces 2,160 megawatts— enough to power 2.16 million homes—at a rock-bottom $30 per megawatt-hour...
...San Diego ratepayers immediately ran to Sacramento and protested...
...Carter's rallying point was an "Energy Plan" that would supposedly free the nation from foreign oil supplies and put us on the road toward self-sufficiency The plan's point of departure was the belief that there were huge, unrealized gains to be made in energy conservation...
...beer and wine industry microbiologically produces 5 percent as many gallons (not all alcohol, of course) as the U.S...
...Or, more realistically, it's 33 gas-fired plants the size of Calpine's proposed 600-megawatt Metcalf Energy Center in San Jose—which has been stalled for two years by opposition from the City of San Jose and Cisco Systems, its largest employer...
...Over 100 new windmill farms now generate 1,400 megawatts of power—3 percent of the state's capacity...
...California gets zero from coal (10 percent with out-of-state plants) and 18 percent from nuclear...
...ARCO built a 385-megawatt co-generation plant in 1986—still the largest installation ever added...
...But in California, the largest portion was in the high-priced, long-term contracts with QFs...
...Congress rebelled against some of the more extreme aspects of the Carter program but retained its essence...
...Energy conservation had long been neglected...
...With the independent producers in the game, wholesale prices were expected to drop...
...Things ground to a halt after 1979, when the Three Mile Island accident effectively ended the nuclear power program in the United States...
...We hired the very best system reliability operators, the people who know how to keep the lights on," admitted Kellan Fluckiger, chief operations officer of the ISO...
...In 1995, the Federal Energy Regulatory Commission (FERC) deregulated interstate prices, opening up a national market for electricity.That year there were 25,000 annual transactions over the interstate transmission system...
...Lovins and other environmentalists argue that computers and their networks account for only a tiny fraction of electricity consumption, but both California's and the nation's energy consumption figures belie their efforts...
...Endless regulatory requirements make it easy for environmentalists and NIMBY groups (i.e., local environmentalists) to halt the proceedings at any point...
...The commission granted the utilities higher rates if they would rebate customers for buying energy-efficient appliances...
...One likely outcome was a complete state takeover of the utility industry...
...Others even more uncharitable noted that the reason many of California's power plants were in the hands of out-of-state companies was because the State of California had mandated that California utilities sell them...
...Lovins's vision, often compared to Mao Tse-Tung's dream of backyard steel furnaces, had a toy-train quality to it...
...That's 130 plants the size of the Campbell Soup co-generation station...
...Looking back over the past 25 years, one thing soon becomes dramatically clear...
...We did not have to enter contracts with qualifying facilities," explains Eric Tharp, director of public affairs...
...A 400-foot windmill can produce 1.5 megawatts, but they are not as attractive as originally imagined...
...In April, the utilities begged the Public Utilities Commission to eliminate pruden-cy reviews and open the door to long-term contracts...
...The unearned profits would go to the government which would use this money to develop alternate sources of energy—synthetic fuels, windmills, solar energy, and whatever other promising techniques lay just over the horizon...
...The power-plant capacity simply isn't there...
...But when natural gas prices took off in June 2000, SDG&E's costs shot up to $128 per megawatt-hour...
...In January, with fearful suppliers refusing to sell to the nearly bankrupt utilities, the state legislature appropriated $1 billion so the California Department of Water Resources could purchase electricity...
...We were paying $90 per megawatt-hour while Washington State was paying only $40...
...Small hydro, once the darling of claan-energy advocates, fell out of favor when environmentalists realized it meant building dams...
...First proposed in the mid-1960s, the plant went through two decades of regulatory review before finally winning approval from the California Public Utilities Commission, the federal Nuclear Regulatory Commission, and half a dozen other county and state agencies...
...Gasoline has 1.5 to 2 times the fuel value of alcohol per gallon...
...As a result the state now ranks 49th in its per-persons capacity to generate electricity...
...With its residue of sulfur and ash, coal can never be as clean as oil or natural gas, but other states were willing to pay the price...
...This was wrong, Lovins argued...
...In 1991, PG&E hired Lovins and Berkeley physicist Arthur Rosenfeld to head a $10 million program applying energy-efficiency ideas to new and existing buildings, with considerable success...
...Since the Power Exchange had no financial credit, it could not enter long-term contracts...
...Continuing to rely on a far-flung grid, anchored by gigantic thermal plants, Lovins argued, was a losing strategy...
...Environmentalists raised the specter of earthquakes...
...Yet "Green Power" is less than two years old and its impact has been trivial...
...To its credit, the Sierra Club has supported a 600-megawatt gas-fired plant that is being opposed by the City of San Jose and Cisco...
...At present it takes at least four years to build a new power plant in California—longest in the nation...
...If and when Freeman takes over the new state utility company, he will have his work cut out for him...
...New technologies such as co-generation, wind, 32 THE AMERICAN SPECTATOR ¦ April 2001 and solar faced almost insurmountable obstacles in cracking this monopoly system...
...And so, the state Chamber of Commerce and the California Business Roundtable began agitating for deregulation, arguing that competition for wholesale electricity would lower retail rates...
...Twenty years ago, the rest of America took the hard path, getting 51 percent of its energy from coal and 20 percent from nuclear...
...California stopped building coal, nuclear, and oil "base-load" plants...
...Writing in Harper's at the time, editor Lewis Lapham noted that the blueprint for Carters Energy Plan was the 1974 Ford Foundation tome A Time to Choose, which argued that energy consumption could be "decoupled" from economic growth...
...Mr...
...All purchases would be made through the California Power Exchange, a state-appointed body, which would pay a uniform price and then redistribute power to the utilities...
...No plausible explanation except the Net exists...
...As a result, California electricity became very expensive...
...When environmental opposition made new nuclear power plants impossible, the majority of the nation reverted to "clean coal...
...Even under "deregulation" the state remained the major player...
...And that is where the utilities went...
...There are few potential sites left, however, and many are considered scenic attractions...
...Lovins's 1977 book Soft Energy Paths, first published by the Sierra Club, became a minor best seller...
...Obsessed with the utilities' supposed "market power," the legislature added two more restrictions: 1) the utilities would have to sell all their non-nuclear and hydro generating facilities to the independent producers, and 2) any contracts for wholesale electricity would be subject to "prudency reviews ."These are exercises in 20/20 hindsight whereby the CPUC decides years afterwards that a utility paid too much for electricity in a long-term contract and forbids it to pass the costs through to customers...
...That state was California under Jerry Brown, a man of unmatched enthusiasm for all that was soft, small, or solar...
...The mechanism for eliminating coal plants from California was air pollution regulations...
...Others pointed out that the purported deregulation was a halfway affair that deregulated only wholesale utility prices but forbade utilities from passing rising costs through to their retail customers...
...With Lovins acting as an adviser, the state rewarded utilities for investing in energy savings for their customers...
...Even though the utilities were now being turned loose into the deregulated arena, Democrats in Sacramento couldn't resist putting a few more knives in the bull's shoulders...
...To everyone's amazement, the fund disappeared in six weeks...
...Southern California Edison owns 48 percent of two 740-megawatt coal-burning plants at Four Corners, New Mexico...
...Geothermal harnesses the steam produced when underground water comes in contact with radioactive heat from the earth's core...
...This would continue until 2002 or whenever the utilities recovered their stranded costs...
...The head of the Independent System Operator, a politically appointed body that found itself buying one-third of the state's electricity, admitted he had no experience in wheeling and dealing in an unregulated market...
...in chaos theory, who's working on the derivative of whatever, the answer is no way...
...Local groups usually oppose these facilities and environmental groups no longer promote them in their literature...
...The "hard path" was built outside California...
...One California plant burns old tires...
...Oh well, you've heard it all before...
...oil industry produces gasoline...
...Cars had been designed almost deliberately to waste gas...
...Instead, all purchases were made on the "day-ahead" spot market...
...Following this "soft path" would mean: 1) making spectacular but achievable gains in energy conservation, 2) building small "co-generation" plants that produced both electricity and steam for industrial heat, and 3) setting up a "transitional" period in which fossil fuels would be employed until replaced by "soft" technologies such as solar, wind, and small hydro...
...Lulled by the conservation successes of the 1980s and early '90s, California was unprepared...
...today more than 60 million homes and businesses are online...
...It could easily be called "nuclear energy...
...THE AMERICAN SPECTATOR ¦ April 2001 37...
...Some of this made sense...
...and Mrs...
...In the New Republic, Greg Easterbrook—who usually writes sensibly on these things— concluded an otherwise astute analysis of the California situation by proclaiming: Eventually, the central utility will be replaced by localized or even house-by-house generation...
...The state was enlisting the authority of the federal government to order utilities in neighboring states to ship electricity to California—even though it was uncertain they would ever be paid...
...Of course the Sierra Club may not necessarily support drilling for gas, but that's another story...
...When an inactive fault line was discovered three miles away under the Pacific, the plant was redesigned to withstand 7.2 on the Richter scale, a quake larger than the one that shook San Francisco in 1989...
...The only option was to build out-of-state...
...But they could not...
...They don't use steam co-generation because there usually aren't nearby industrial facilities...
...The state government had huge budget deficits...
...Instead there was an alternate future—a world of decentralized sources Energy Utopia—a world running entirely on renewable resources...
...The wildcard was the Internet, another California phenomenon, which suddenly began driving up demand for electricity...
...transportation sector could run on gasohol, he used beer and wine production as a comparison: Each year the U.S...
...It also owns 56 percent of the Mojave coal plant in Nevada and 16 percent of the Palo Verde nuclear station near Phoenix...
...Would things have been different if the utilities hadn't accepted the $65 price freeze in exchange for recovering stranded costs...
...How long might it be before someone suggests nuclear power wouldn't be a bad idea...
...When blackouts began in October, the legislature's response was to vote more funds for...
...There was no end of finger pointing...
...Overriding the utilities' franchise monopolies, PURPA allowed "qualifying facilities" (QFs)—meaning anything from windmill farms to fossil fuel back-up generators—to plug into the grid...
...Nuclear technology would lead to terrorist bombs, intractable wastes, the rule of a "nuclear priesthood" and huge hidden social and environmental costs...
...Governor 36 THE AMERICAN SPECTATOR ¦ April 2001 Davis wants 20,000 megawatts of new generating capacity by the summer of 2004...
...Waiting in the wings was S. David Freeman, now general manager of the Los Angeles Department of Water and Power (LADWP...
...All told co-generating plants have yielded about 2,500 megawatts since 1985...
...California now ranks dead last among the 50 states for per-capita consumption of electricity...
...At the same time, California stopped building coal, nuclear, and oil "base-load" plants...
...Others implemented it gingerly...
...A slender and intense man, quite obviously possessed by a Utopian vision of the just society," wrote Lapham in describing his interview with Freeman, "I remember being taken aback by his violent use of the word 'power.' His enemies had been delivered into his hands...
...In claiming that the entire U.S...
...This prompted a "gold rush" into alternate energies...
...But they do use combined-cycle generation, which basically means building two turbines and using the steam twice...
...The only problem has been in building transmission lines, which always raise scenic complaints and the speculative danger (now proven wrong) that high-tension lines may cause cancer...
...This led to the construction of ever-bigger generating stations, which the utilities readily undertook because they were promised a return on their investment...
...Electricity was squandered...
...Forced to buy through these amateurs, the utilities quickly lost $12 billion—almost their entire net worth...
...But Democrats in the state legislature—still paranoid about the utilities' market power—reversed the decision in the June Budget Act...
...As a start, the California Public Utilities Commission undertook the most ambitious energy conservation program in the nation...
...California has the "Energy Crisis...
...The amount of energy in a handful of uranium is equivalent to the amount of energy in a 100-car freight train of coal...
...The vehicle was PURPA—the Public Utility Regulation Policy Act of 1978, which set the state utility commissions on the path of encouraging co-generation and renewable resources...
...I In 1986, on a sunny afternoon in May, officials of the Pacific Gas & Electric Company cut the ribbon on Unit II of the Diablo Canyon Nuclear Power Station, halfway between San Francisco and Los Angeles and right on the Pacific Ocean...
...They produce no air pollution, no strip mining, no greenhouse gases...
...He was also the leading candidate to head the new "California Consumer Power and Conservation Financing Authority," whose name perfectly described its conflicting mandate...
...The PUC has guaranteed us recovery but it hasn't told us when or how," said Ed Larson, spokesman for SDG&E...
...Twelve times this amount would be 480 million acres—half the farmland in the United States...
...The "soft path" was pursued at home...
...The argument was specifically aimed at nuclear power...
...Manufacturers fled the state...
...Everything was precious and simple yet somehow unreal...
...With the coming of the Digital Economy, demand suddenly revived...
...Governor Davis also reviled "out-of-state independent operators" who were supposedly withholding power in order to drive up prices...
...What happened to co-generation and renewables...
...This strategy, called the "soft path," has led California to where it is today The story begins in 1977, when the nation found itself in the grip of an OPEC cartel...
...Describing Freeman as a "wandering moralist" obsessed with the "wickedness of the oil companies," Lapham reported how Freeman had steered the Ford report toward virtual nationalization of the oil industry...
...All told, despite years of effort and subsidies, renewables con34 THE AMERICAN SPECTATOR ¦ April 2001 tribute only 12 percent of California's electrical requirements...
...Sales were made through a "reverse Dutch auction," where all buyers pay the price of the last bid...
...The Carter plan would resolve this dilemma by fixing oil prices at a politically acceptable level and then taxing up prices to the world market level...
...megawatts," says Bill Brier, spokesman for the Edison Electric Institute in Washington...
...As a result, the state now has no sulfur dioxide emissions (acid rain) and ranks 40th in emission of carbon dioxide per square mile...
...Illinois now gets half its electricity from coal, half from nuclear, and exports power...
...Needed or not, they must purchase QF power...
...Still, with $5.8 billion sunk in the ground, PG&E executives persisted...
...Utilities in Oregon, Washington, and Utah were raising rates to their customers in order to comply with federal orders to ship needed power to California...
...This would leave the older utilities vulnerable...
...In a buyers' market, this would THE AMERICAN SPECTATOR ¦ April 2001 35 force everyone's price down...
...If your solar system fails...
...Should the state continue to roll forward its electrical bills—well, we're looking at New York City in 1974...
...From there he went on to head Texas's Lower Colorado Power Authority and the New York Power Authority, eventually arriving in California...
...That is why there is serious talk of locating plants in Mexico (which will make things interesting if Mexico ever decides to nationalize the plants).The only problem is lack of transmission lines...
...From 1983 to 1995, Golden State energy consumption grew only half a percent per year, 20 percent below projections...
...Hardly...
...The director of the Foundation group, Lapham noted, was S. David Freeman, "a fervent advocate of environmental reform now employed in the White House Office of Energy Planning...
...For all anyone knew, the whole system might be wildly uneconomical—but there was no way to tell because of the regulated market...
...As a result, California also ranks 49th in its per-per-son capacity to generate electricity...
...And so, as the summer of 2000 approached, California found itself woefully short of power...
...The legislature forced prices back to $65 and let the utility take the losses...
...In 1977 Freeman returned to the Tennessee Valley Authority, where he halted construction on eight nuclear plants and began an ambitious program on energy conservation...
...Promised a The impetus to deregulate came originally from the federal government...
...Fifteen years later in mid-winter— the lowest season for electrical consumption—the Golden State was undergoing rolling electrical blackouts...
...These are high-cost generating facilities built under regulation that will not survive competition against the independent energy producers— newcomers such as Duke Power, Reliant Energy, and Calpine (see page 38...
...Brimming with enthusiasm, the Public Utilities Commission mandated 20-year contracts with QFs...
...California now has 43 geothermal stations producing 2,500 megawatts...
...Riddled with loopholes and incentives, PURPA was essentially optional to states...
...In order to help them recover their stranded costs, the utilities were granted a fixed price floor of $65 per megawatt-hour—$10 below their current rates but well above where prices were expected to go...
...But now we do have to factor in that beer and wine are only about 5 percent alcohol, which means multiplying again by 2O.This leaves us with a requirement of 9.6 billion acres—ten times the entire cropland in the United States—to produce one-third of our transportation needs in 1977...
...Steadily falling prices in solar cells will probably make home production of electricity practical for Sun Belt states within the next decade or so...
...California now has 38 biomass plants— many of them tapping methane from landfills—that generate 690 megawatts...
...Since the late 1960s, we've known environmental regulations made it impossible to burn coal in Southern California," says Steve Hansen, spokesman for Southern California Edison...
...After all, improved technology now has nuclear plants running at 95 percent capacity...
...It was a triumph of determination for the San Francisco-based utility...
...Radically restructuring the electrical generating system was not on President Carter's original agenda...
...Photovoltaics—the direct conversion of solar energy into electricity— has not yet proved practical...
...The last plant added to the grid was Campbell Soup's 158 megawatts of co-generation in 1994...
...Stuck in this can't-win situation, the utilities generally refused to sign long-term contracts and were stuck in the spot market...
...The final 10 percent is from hydro, half of that from the federally-owned Hoover Dam...
...Of course the tripling of gasoline prices was already encouraging Americans to conserve—but that wasn't acceptable because it produced "unearned profits" for the oil companies...
...But it is often difficult and expensive to procure large enough steady supplies of garbage...
...The Modesto Irrigation District and several municipal utilities also own out-of-state coal plants, as does the Los Angeles Department of Water and Power...
...Even Governor Davis acknowledged this by saying that the state's first priority should be to throw aside regulatory delays and add 20,000 megawatts to the system as soon as humanly possible...
...The Audubon Society opposed new construction and even lobbied against federal subsidies for several years but has since become reconciled...
...cellars and breweries...
...By 1991, our rates were double that of neighboring states," says Stahlkopf...
...Because LADWP was not forced to sell its plants, it was able to supply Los Angeles with adequate power without raising rates...
...In February, the legislature adopted a "comprehensive solution" by authorizing a $10 billion bond issue— the largest municipal borrowing in history—so the state could enter long-term contracts...
...The major roadblock to deregulation was "stranded costs...
...By September they had reached $179...
...It is important to recognize that the two paths are mutually exclusive...
...Freeman emerged as a hero in the crisis because he had refused to join the deregulation...
...No one imagined that within two years electricity would be selling on the spot market for $350 per megawatt— $1,000 per megawatt-hour at some especially tight moments—and that these price floors would quickly convert to ceilings...
...The independent producers have found it most economical to build gas-fired plants of between 350 and 600 rate of return, the utilities passed these costs through to their customers...
...Unfortunately, Lovins often overstated his case...
...We can't do that...
...where small-scale generating stations were matched to small-scale end uses...
...Ignoring his own dependence on coal-fired plants, Freeman predicted, "The California crisis may signal the end of the age of big power—nuclear power plants and dams and coal-burning generators.The future is micro-turbines and fuel cells and clean sources for power...
...Nonetheless, in 1978 Congress was inspired to set America along the Soft Energy Path...
...Diesel fumes from trucks and buses already account for 70 percent of the states air-pollution-related health problems, according to the California Air Resources Board, yet officials were reluctant to crack down because of the power shortage...
...Manipulated by state regulatory officials, these avoided costs could often be set forbiddingly high, so that the utilities might want to avoid them altogether...
...Pundits and politicians readily blamed what Governor Gray Davis called the "disastrous experiment in deregulation" of electricity the state initiated in 1996...
...A year later its price had dropped to $35 per megawatt-hour...
Vol. 34 • April 2001 • No. 3
