Much to the dismay of consumer activists, California's Governor Gray Davis has held exclusive meetings with the heads of Pacific Gas and Electric and Southern California Edison. The two companies, which helped craft the much-maligned 1996 deregulation law, have wracked up billions in unpaid wholesale energy bills they claim they can't pay. Few outside Davis' inner sanctum, from reporters to citizens, know exactly what goes on during Davis' closed-door meetings. The matter is aggravated by the fact that two of Davis' energy advisors have ties to Edison.
Most of the non-insiders are unsure how many meetings and conference calls have been held since the state's two-year old deregulated energy market went haywire and who besides PG&E and Edison have been included. What is known is that a deal on how and who will pay off the two investor-owned utilities's humongous debts is in the works.
The multibillion dollar question is this: What will the state get in return for paying off their debt, if anything? The size of their financial hole -- be it $13+ billion that PG&E and Edison claim, or a fraction of that 11-digit figure as ratepayer advocates insist -- is a matter of hot debate.
Fears that a Secret Deal Will Surface After November 2002 Elections
According to Davis' spokesperson Steve Maviglio, negotiations to resolve the energy crisis must be secret to allow Davis to cut a beneficial deal that allows the private utilities to pay their bills and stabilize the teetering deregulated market. That requires the state's administration to hold their cards close to their vests and hidden from the out-of-state generators, he said. The generators, which include Texas-based Enron and Reliant Energy, as well as Calpine, Duke and Dynegy, jacked up wholesale energy prices to unprecedented levels.
Up until the third week of February, Maviglio said the governor held three exclusive talks with the heads of PG&E and Edison, John Bryson and Robert Glynn respectively, since the beginning of the year.
"All information will be released at the appropriate time," Maviglio said, acknowledging the frustration of those outside the inner circle trying to be informed.
Since late February, Davis began meeting almost daily with the utility executives.
In the meantime, consumer and ratepayer advocates fear Davis will cut a deal that ultimately knocks up consumers utility rates, but only after the November 2002 elections when the governor is up for reelection.
"It is very troubling," said Mike Florio, senior attorney for TURN, a 25-year-old organization that works to protect ratepayers. Florio explains that his organization's role has been limited to letting the governor know what they like and dislike about the proposals he releases. Other activists, including those from the Foundation for Taxpayer and Consumer Rights, Global Exchange and California Public Interest Research Group, have had no access to the governor and/or limited contacts with key legislators.
"Everyone, except for a select few, is running into walls," said Doug Heller, consumer activist with the Foundation for Taxpayer and Consumer Rights. The foundation launched the successful insurance initiative in 1988 that led to more than $1 billion in customer rebates and rate rollbacks. The group may put an initiative on the ballot next year that would create a state power authority to run the electricity business if Davis and the legislators fail to protect the state's consumers.
Rushed Hearings, Although Billions of Dollars of Taxpayer Money Were on the Table
Heller says that late last January he got a call from a TURN lobbyist saying that he and another ratepayer advocate were heading to a meeting with Assembly speaker Robert Hertzberg (D-Van Nuys). Heller rushed to Hertzberg's office and waited outside his office door for 30-minutes but was never let in. Hertzberg's spokesperson Paul Hefner said he was unaware of the event, adding that the speaker has met with a number of consumer representatives.
For Heller, Davis' inner circle, which includes Hertzberg, is a "den of thieves."
Hertzberg's advisors included two investment bankers from Wall Street's Credit Suisse First Boston Bank, whose client list includes many of the generators selling power into the California market at astronomical rates. Hefner acknowledged that Credit Suisse bankers were part of Hertzberg's team of experts, but said they worked on a temporary basis and for free. In addition, two of Davis' energy advisors were formerly employed by Edison, Michael Peevey and Larry Hamlin. Peevey, who was appointed as Davis' special advisor, is a former president of Edison. Hamlin, an Edison vice president who is on leave, is the new power plant construction chief for the state.
Benjamin and others in the Public Power Campaign have attempted without success to meet with the governor to counter the lobbying efforts of the utilities, generators and Wall Street.
Meanwhile, momentous changes moved ahead with minimal public input. In January and early February, emergency legislation was passed and signed into law at breakneck speed. Committee hearings were called last minute and public participation was scant, although billions of dollars of taxpayer money was on the table.
In mid-January, the state stepped in to buy electricity for the two private utilities and spent $45 million a day of taxpayer money, for a total of $540 million. In spite of the sky-high price tag, how much electricity the state bought is a well-guarded secret.
Later that month, emergency legislation was passed that dissolved the Cal-ISO board and replaced it with a much smaller board that Davis hand-picked.
Also signed into law was a bill that allowed the state to enter into long-term power contracts, which was backed by $10 billion of the state's General Fund money. The terms of the contracts have been kept secret, for "competitive purposes."
On February 8, the governor issued a series of emergency orders to speed up the construction and retrofitting of power plants. Several hours after the press conference, when his orders were finally available, it appeared the new batch of electricity supplies from the plants would be at the expense of the environment, contrary to Davis' claim.
The governor is in the midst of exclusive negotiations with PG&E, Edison and San Diego Gas and Electric to work out a possible purchase of their 25,000 miles of electrical wires strung across the state. Ratepayers fear he will buy them at an inflated value.
"The administration and legislature seem hell-bent on crafting a solution behind closed doors while the public remains -- literally at times -- in the dark," said Kent Pollock, executive director of Sacramento-based California First Amendment Coalition. "They apparently are confident that we will trust the self-serving nuggets of information they release following closed-door meetings."
How Much of This Energy Crisis is Manufactured?
Davis first declared an energy emergency on January 17, after it appeared the major utilities would go belly up and the grid would dry up. The powers of the legislature and the governor have extraordinary power at their disposal during emergencies. Urgency legislation can be passed with little debate or public input. The governor can issue emergency orders that ignore environmental protection laws and also take over assets, such as power plants and run them to keep the lights on.
Crisis management, however, often comes with a price. "Haste is what got us into this mess in the first place and we're not going to make that same mistake again, "acknowledged Roger Salazar, Davis' spokesperson.
Many consumer advocates and legislators worry about the speed at which things are coming down the Capitol pike. They point to the grave consequences arising from the 1996 deregulation law by Senators Steve Peace (D-Chula Vista) and Jim Brulte (R-Cucamonga), which was rammed through the legislature and devoid of adequate public debate. It passed on a unanimous vote and Governor Pete Wilson eagerly signed it into law.
Sacramento's Assemblyman Darrel Steinberg defended the governor's and legislators recent actions saying. "Given the crisis at hand, the consequences of inaction are great in and of itself."
A looming question though, in light of the emergency powers, is how much of this energy crisis is manufactured?
A letter from Credit Suisse First Boston Corporation, which was posted on their web site, indicated the state's energy shortage is a means to an end. "[T]he rolling blackouts in California are more likely intended to soften up the Legislators and the voters to the need for a rate increase than they are indicative of a permanent 'when the lights went out in California scenario,'" states the January 18 letter.
The memo was brought to Hertzberg's attention but he didn't see it as a cause for concern, Hefner said. "It is not from the folks on the ground," he added.
Heller reacted very differently, contending that Hertzberg should have taken the letter to state Attorney General and initiated a racketeering investigation into the generators' practices.
Since the beginning of the year, the Public Power Campaign has been trying to cast some light on the fast moving, high stakes energy game and Davis' maneuverings. Group leaders have made numerous phone calls, sent faxes and letters to the Governor to set up a meeting in his office, but to no avail.
They strive to not only prevent legislation saddling consumers with the investor-owned utilities debts but also stop measures that weaken environmental safeguards to boost energy supplies. The coalition wants profit driven private utilities replaced by public power agencies -- like the Sacramento Municipal Utility District and Los Angeles Department of Water and Power.
At the end of January, Medea Benjamin, the Green's recent candidate for U.S. Senate, and Susan Rodriguez from Citizens Power Lobby, along with about two dozen citizen activists, marched to the governor's office. The two women had petitions bearing 9,000 signatures to deliver that urged Davis to not foist on consumers PG&E and Edison's debts caused by the deregulation law. The petitions also took issue with the 9 percent utility rate increase granted by the California PUC in January to help the utilities mop up some their red ink caused by the breathtaking increase in wholesale energy costs. The governor, however, refused to meet the consumer advocates.
On February 7, and coincidentally the day after Davis had dinner with the head of Edison, Benjamin and Rodriguez demanded to see the governor once again. They waited for half an hour in the Capitol to schedule a meeting.
Then they got mad.
The two women attempted to march into Davis' office but were grabbed by CHP officers at the door. Benjamin and Rodriguez were arrested and taken to Sacramento County Jail.
Rodriguez was released but Benjamin was thrown into jail for 15 hours. She said she was given neither food nor a blanket. At 5:00 a.m. the next day, she was released from jail after friends posted $1,000 in bail and learned she was charged with resisting arrest and battery against the arresting CHP officer. Benjamin is under 5 feet tall and weighs less than 100 pounds.
"I was the one who was battered," she said, then quipped she would have been better off spending the $1,000 on campaign contributions to Davis.
At the March 1 court hearing, Benjamin demanded a trial on grounds the charges against her are baseless.
As early March, Davis' office had not scheduled a meeting with Benjamin or Rodriguez.
Power Companies Shield Billions in Profits
The information outages leading up to Benjamin and Rodriguez's arrests also raised the hackles of their fellow activists. The leaders are calling on the governor to drive a hard bargain with the generators and utilities to keep the state's sizable budget surplus from all washing down the electricity drain. That requires Davis to step up to the plate and use his authority to take over power plants and implement a windfall tax on the generators excess profits.
But that move has yet to happen. Instead, on January 19 Davis signed a bill passed by the legislature, authorizing the state to spend $400 million to buy power for the utilities' customers on a temporary basis.
"They just threw $400 million down the toilet without providing any protection to the taxpayers," Heller lamented, noting the state could have bought a utility power plant for that price.
A few days later, during a Senate energy committee hearing it was revealed the state was spending about $45 million a day to buy megawatts for the private utilities. (One megawatt powers about 1,000 homes). How much power California received for the hefty sum was very hush hush.
Spokesperson Maviglio said the price had to be kept under raps because the state is buying energy every day. Revealing the sum would only increase the generators leverage, he said. The price tag circulating in the capitol hallways was said to be $.30 a kilowatt hour, more than five times higher than what Davis said he would pay. (To put the price in perspective, PG&E ratepayers now pay a capped rate of $0.065 kilowatt-hour. One kilowatt/hour is the equivalent of 10 100-watt light bulbs burning for 60 minutes.)
Until a few months ago, PG&E and Edison were sitting pretty. According to recent Public Utilities Commission audits, they reaped $16 billion from the deregulation law, which required ratepayers to pay off the companies' bum investments, such as cost overruns at nuclear plants. They also have benefited from the unprecedented wholesale energy costs because they sell electricity from their fossil fuel, nuclear and hydro power plants into that market.
The audits also revealed the utilities sold off large chunks of their aging power plants and much of the money they raked in under the deregulation scheme went to their parent corporations. But the parents, PG&E Corp and Edison International, which are worth billions of dollars, have refused to throw their subsidiaries a lifeline.
After agreeing to buy power PG&E and Edison said they couldn't afford, Davis floated the idea of having the state take stock options in exchange for the companies debt. After it was released, consumer groups attacked the plan as seriously flawed. The utilities would be bailed out with shares of questionable value.
"The revenue they might one day generate is a drop in the bucket under the most optimistic scenarios," said Nettie Hoge, the executive director of TURN. Another problem was that the ratepayers' shareholder profits would be tied to utility rates. If their utility bills rose so too would their shareholder returns. There was also inherent risk of owning stock in companies owning and operating nuclear power plants, notably possible leaks and decommissioning costs, which can run into the billions of dollars.
In spite of Davis' moves, the energy crisis continued to spiral downward. Then the day before Groundhogs Day, Davis signed emergency legislation by Assemblyman Fred Keeley (D-Santa Cruz), which allowed the California Department of Water Resources (DWR) to enter into long-term power contracts and sell the electricity to PG&E and Edison customers. DWR's purchases are backed by $10 billion in taxpayer money. Just how that money will be paid back is still a mystery and so is the impact on ratepayers. In addition, the price tag of the watts has been kept in the dark.
DWR requested sealed bids from generators and after its first round of bidding received a fraction of the power it needed to cover the shortfall. Many consumer advocates didn't take issue with the secret bidding process because the state's power costs would go even higher if generators knew what their competitors were charging. But the activists insist that after the long-term bids are in the terms should be assessed by more than the administration and DWR, who are venturing in new territory. Especially given the huge amount of taxpayer money at stake.
"It's a little risky to have the state enter into deals that few people understand," warned Dan Jacobson, Cal-PIRG legislative advocate. Maviglio countered that Davis' experts are well-versed in power purchases.
State Treasurer Kathleen Connell, however, thought it would be a good idea to inform the public about how their money was being spent. She announced February 8 that she was launching a web site that listed the amount of power the state bought daily, its purchase price and how the taxpayers would be repaid. But her efforts were intercepted by the administration.
The next day, the controller reversed course saying, "After discussions today with senior Davis officials, it is clear that final negotiations regarding long and short-term energy contracts would be impacted by disclosure of payment information."
The Department of Finance revealed the state as of mid-March has spent $2.7 billion on power.
Paying Over Twice the Value for an Aging System
On top of the secret bids and Davis' closed door meetings with utilities, the governor has curbed and spun information from agencies he controls.
For example, Davis appointed a new board of directors to the California Independent System Operator in January. An emergency bill by Assemblyman Keeley and signed into law allowed Davis to appoint his own Cal-ISO board.
Four of the five new Cal-ISO board members have worked with the governor, with TURN's Mike Florio being the odd man out. During the new board's first meeting, statements were made indicating the organization's independence would take a hit.
When the Cal-ISO board of directors was a 26-stakeholder board, made up of utility, generators, industry and consumer representatives, the agency's public relations office did little to filter its news. In fact, it made impressive efforts during the weeks of initial chaos to keep the media up to date. Recent calls to the Cal-ISO office, however, have been directed to the governor's office.
Davis spokesman Roger Salazar denied trying to control the information coming from official sources but admitted the administration has sought to curb the information coming out of Cal-ISO. "One thing we have asked them is that they speak with one voice so the messages aren't mixed," he said.
Over at the Public Utilities Commission, Davis has imposed a short leash. Almost immediately after he appointed former Office of Planning & Research director Loretta Lynch to the head of the commission in March 2000, the formerly-open members of the commission staff quit returning phone calls to reporters, citing directives from Lynch's office. The commission had shut down public access little-by-little in the last decade while under Republican rule, but the change in information access was quite abrupt with Lynch's appointment. Her office responds, but all information must get filtered through the PUC president's office, her staffers said.
At the time the bill that would create the new Cal-ISO was being debated, a number of legislators expressed concerns about having Davis call the shots on selecting new board members. Senator Deborah Bowen (D-Marina del Rey) later introduced legislation that would require new Cal-ISO board members to be confirmed by the Senate. "This will balance the power of the executive and legislative branches," she said at a February 22 Senate Energy Committee hearing.
In early February, Davis executed a series of Emergency Executive Orders to speed up the building and expanding of power plants. He touted his plan as accelerating requisite plant permitting to add 5,000 megawatts of new juice every year for the next four years.
"My proposal and executive orders will build our energy supply and maintain our environment commitment," Davis announced, while standing beneath huge circuit breakers at a power plant under construction in Yuba City. At the February 8 press conference, press releases were handed out that supposedly summarized his orders, but copies of the directives were not included. Several hours passed before the governor's office released the orders and the language indicated that air and water quality protections would be sacrificed in the name on new power supplies.
Two days after the February 14 launch of the citizen power campaign, Davis unveiled his framework for grabbing the out-of-control energy market by the horns. Prior to the start of the three-day Presidents' Day weekend, he said a key ingredient of his rescue package was a state buy-out of PG&E, Edison and San Diego Gas and Electric's 25,000 miles of high voltage wires. Earlier, Senator Burton introduced a bill to have the state take over the system but the legislation was watered down to authorize Davis to cut a deal with the utilities.
At a packed press conference, the governor refused to say how much we would pay for the three private utilities' electrical wires. After being pressed by reporters, he would only concede that the sales price "would be some multiple of book value," which is $3.2 billion. A final purchase price will help the utilities pay off their debt -- by how much is a matter of great dispute.
TURN and other ratepayer advocates have been kept out of Davis' exclusive meetings to cut a transmission highway-for-debt swap. The advocates were, however, somewhat pleased to learn the governor's idea of exchanging stock options for the utilities debts was no longer on the table and that a valuable asset was part of a deal. But their immediate concern became the cost of the transmission system.
The following week, Davis said the sales price under consideration was 2.3 times above book value: $7.36 billion. Ratepayer groups said the wires were not worth that amount and that it was a backdoor utility bailout. Sections of the private utilities transmission systems date back to the 1920s. Upgrades of the aging system that suffers notorious electron bottlenecks are estimated at $1 billion and expansion is needed.
In one of the odder alliances, Republicans agreed with the consumer groups this time. After the proposal to buy the lines was released not one backed Davis' grid-for-utility-debt exchange, in no small part because they too were left out in the cold. "They view it as a complete capitulation to the utilities," said Assemblyman Bill Campbell's (R-Villa Park) spokesperson Jaime Fisfis.
READ California Energy Crisis Puts Governor On Hot Seat
Last summer, after San Diego ratepayers saw their utility bills triple and quadruple, the Foundation for Taxpayer and Consumer Rights began working with the San Diego County Board of Supervisors to protect ratepayers. They concluded that creation of a state power authority to generate and deliver power to homes and businesses was the route to market stabilization. On November 28, before the electricity chaos spread across the state, the foundation announced its draft of a ballot initiative for 2002 that would let voters decide if they wanted nonprofit public power to replace the current greenback-driven system.
The foundation head, Harvey Rosenfield, said his group wanted to work with Davis and legislators but added his group would not participate in any non-public legislative negotiations or discussions. "We have nothing against private discussion on public policy, but we believe the process of developing legislative proposals to fix this disaster should occur before the full scrutiny of those who are most affected -- the public."
Recently, the group got wind that momentum was building to knock out the potential initiative -- either via legislation or a prohibition woven into a court settlement of PG&E and Edison' lawsuits against the state over their ability to raise rates.
"The prospect of the Legislature and Governor attempting to muzzle the voters would fuel an extraordinary and appropriate public backlash," Rosenfield warned.
"This is an unbelievable giveaway, an unbelievable scam."
If one steps away from the energy market frenzy, Davis' actions -- his exclusive rendezvous and information blackouts -- may seem like politics as usual. But the huge amounts of money involved and given that the commodity is electricity, an integral part of our modern life style, his wheeling and spinning gets cast in a harsher light.
"It is all the things we know and dislike about politics but to the extreme," Benjamin said. Much of the blame is attributed to the utilities and/or generators political contributions that have gone to Davis and all but a handful of the 119 state legislators.
Another important critic is Barbara George, an activist since the 1960s and founder of Women Energy Matters (WEM), a group that promotes environmentally sound energy practices in the home. Domestic consumption soaks up slightly less than a third of the state's energy.
The evening after Davis announced his deregulation fix-it proposal, Benjamin and George met with a group of about 50 people at a cafe in downtown Sacramento to discuss the energy dilemma.
"This is an unbelievable giveaway, an unbelievable scam, for which we will be paying for many, many years unless we stop it," Benjamin said. She warned that failure of Davis and the Legislature to get to the root of the problem would drain the once-sizable budget surplus, depriving California of needed funds for myriad programs -- from education to health care.
But, she and George did not deliver all bad news. They noted that citizen and ratepayer advocates helped shoot down Davis' plan to use public funds to buy the utilities debts in exchange for stock options, which wouldn't come close to reimbursing the state.
George added that the energy chaos also presents a golden opportunity to rebuild the energy system to address the needs of the 21st century and reduce global warming. Deregulation squelched conservation, non-polluting energy and the expansion of the network of public power agencies, but they are being given new life.
Opportunity to further promote that agenda will arise when bills to carry out Davis' plan as well as other legislative proposals for curing the very sick energy market are debated at public hearings.
If the people don't like what they get, they can back the initiative that may call for the state to run the electricity market. Citizens and ratepayer may also have an opportunity to finally have their voice heard at the state Capitol and express their dissatisfaction during the next election.
JA Savage contributed to this story.
Once upon a time, in the kingdom of California, there was a watt named Wally. Wally was an energetic young lad, a boy who worked hard on his family's farm. He was schooled in the traditional ways of life and learned his lessons well.
Wally's family farm grew, processed and delivered electricity -- a potent juice prized throughout the land. His was a simple life, and he would amuse himself by hopping and skipping through the fields with his many brothers and sisters, darting around like fireflies on a warm summer's eve.
But it wasn't all fun and games on the prosperous farm, for Wally and his siblings had important jobs to do. Under the guidance of their parents -- Peegee and Andy -- Wally and his siblings planted the seeds of electrons, made sure they grew safe and strong, harvested the crop and processed it into electricity.
Wally's family farm holdings were called PG&E Farms, a name his parents cleverly derived from blending their two first names. They were one of the three largest electricity farming families in California, along with the Edisons of Southern California and Stan Diego's family in the far south.
All three agricultural empires were vast and powerful, but growing electricity was an expensive process, so each family's operation was also supported by thousands of investors, who bought stock in the family farm. After the crop was harvested and taken to market, the shareholders reaped a share of the profits.
Taking the crop to market was Wally's favorite part of his farm duties. He knew how much people loved and needed their high-powered juice, so each delivery filled him with pride. Electricity brought such light and warmth into people's lives that they considered it as essential as air or water.
With a bright smile on his face and a tune on his lips, Wally traveled the lines through California's verdant fields and sparkling cities, delivering his family's powerful juice to factories, schools and homes.
After many years of traveling the same lines, Wally came to know the routes well. He knew when he needed to work up a head of steam to carry a difficult section, and when he could take it easy. During the summers, Wally delivered extra juice to cool California's Central Valley, where it was hot and dry. Winters always brought extra trips to the beautiful Pacific Northwest to protect against the cold air.
Wally's work was steady and predictable: Plant the seeds, harvest the crop, process the juice and take it to market. That was the routine he knew from as far back as he could remember. Wally came to know his customers well, and they knew Wally as a reliable, hard-working young fellow.
Now, Wally's family was always well-paid for its crops ... very well paid. In fact, that's where the trouble began. The price that customers in California paid for the electricity crop was set by Lord PUC, a powerful commissioner who worked with a panel of advisers.
Wally's family was wealthy and well-established in California, so they were held in high esteem by Lord PUC, who always made sure the PG&E Farms and its investors could depend on a handsome profit.
Not all of Wally's customers were happy with the arrangement. People like Irene Industry, Bobby Small Business, Carl Corporation and even Joe Ratepayer complained that the subjects of other kingdoms paid just two pieces of gold for the same juice that cost Californians three gold pieces.
"Why, it's just not fair!" rose the cry across the land. "We must do something!"
Carl and Irene went so far as to threaten to grow their own electricity, and they were two of Wally's family's biggest customers. If they stopped buying Wally's juice, then the farm just wouldn't be prosperous.
Wally's family and other farmers knew they had to act and hired old members of the king's court to protect their businesses. Their savvy consultants roamed the palace hallways and met with their rulers, including Lord PUC and members of the Parliament.
The hired influence-peddlers pointed out to the rulers that electricity farming was more expensive in California because their enlightened subjects had demanded that farmers be kind to their environment and capitalize on sun, wind and water power. There was also a period when the families were encouraged to try nuclear-powered farming, which proved to be expensive. So the price of electrical juice had to go up.
But once the tide of revolt began among the rabble, it was hard to stop. Hearing the cries of the disgruntled citizens, Lord PUC even joined in the chorus, "We must appease our subjects." And the kingdom's powerful leaders took note -- and opened their pockets to campaign contributions from farmers across the country who wanted to grow electricity in California, including Irene and Carl.
After their pockets were full and the arguments were argued, California's leaders decided the best way to bring down prices was to free the electricity market from Lord PUC's control, divide up PG&E Farms among many different farmers and let them compete with each other. Their vying for market share would set the price of juice.
Peegee and Andy weren't so sure they wanted to sell their beloved farms, but Lord PUC promised they would be showered with more gold than they had ever seen, far more than their farms were worth, if they would sell most of their vast holdings. You see, Lord PUC promised to force Wally's customers to pay for all the bad investments PG&E Farms had made on their behalf over the years, such as their nuclear-powered farm in Diablo Canyon.
Eventually, Wally's parents started to like the idea of selling the farm and slowing down a little. So they sold all but a small part of their property and stashed away their newfound fortune. After that, the only job for Wally and his family was to deliver the crop to a newfangled "free" market, a crop that was now produced mostly by out-of-kingdom farmers.
And that's when Wally's life changed, and in such a way that he could never have imagined.
Wally was still doing his favorite part of the job, delivering the dynamic commodity to market. But he now worked for many different farmers, none of whom he knew and who had odd family names like Duke, Reliant and Dynegy.
Wally had always known his customers, but now he was told to travel unfamiliar lines and deliver the charged juice to customers he had never met. Often, he had to travel great distances, delivering the crop to other kingdoms even as Californians went hungry.
"It's a new world, kid," Wally was told by one of his new bosses. "Yesterday may have been all about keeping the juice flowing throughout the kingdom. But tomorrow ... tomorrow is about making mounds of money. It'll be great, kid, you'll see."
Four years later ... Dec. 12, 2000 BEEP, BEEP, BEEP, BEEP!
In a smoke-filled barroom, Wally and his co-workers automatically check their pagers. Unlike the old days, Wally was now always on call, expected to zip out at a moment's notice when one of the farmers makes a big electricity sale. .
"Damn, it's mine," says Wally. "Gotta fly, boys."
Wally hit the bathroom on the way out, just to splash some water on his face and try to get his head together. He'd been hanging out here with his electron buddies for two days now, killing time, just waiting for the call that would send him flying out the door to ... where was he headed? In days of yore, he would be en route to Washington in December, but these days, he hadn't a clue as to where he'd jet off to next.
"Jesus H. Christ," Wally mumbled to himself. "Arizona-such a dull, dry place."
Here he was, charged with delivering California-grown electricity to the people in other kingdoms, at a time when his people were facing rationing and paying more than ever for the stuff. Instead, he was delivering a load to customers in the kingdom of friggin' Arizona.
"Oh, well," Wally sighed, "a job's a job."
He used to get more upset about the injustice of it all, and how his new job made him feel like a traitor to the suffering people of his own kingdom. But these days, there aren't a whole lot of other lines of work for a young charge with enormous energy bills of his own to pay.
Besides, Wally was in demand like never before, as a growing population in the western kingdoms competed to buy up crops from farms that hadn't acquired any new fields for more than 10 years. And in the new system, customers in Arizona had as much right to buy the precious juice as Californians, as long as they met the farmers' high price. In the old days, California customers got served first, but not any more.
Yet these days, Wally had little time to ponder such things, especially given his ever beeping beeper. So Wally hopped onto the grid, took the line down to the old farm in Morro Bay that his parents used to own, but which was now run by Duke Energy. The Dukes were located on the other side of the continent and had bought up a lot of the old electrical fields in the kingdom. Coming in over the ridge and dropping down into the gorgeous estuary of Morro Bay, Wally felt a little nostalgic.
His parents first started farming here back in the '50s, long before he was born. Wally now darted among the circuits, breathing in the clean, salty sea air and remembering more carefree days. Even the circuits on which he danced were soon to change, as Duke planned to upgrade the processing plants with efficient new ones.
Shaking off his reverie, Wally got back into work mode. He said hello to the farm foreman, picked up his load and hopped onto the Arizona-bound line. Wally was just pulling into Phoenix when ... BEEP BEEP BEEP!
"What the hell?" Wally mumbled to himself. "Why is my beeper going off now? I haven't even delivered the load yet."
He couldn't believe it when he saw "California" flashing on the pager. He rubbed his eyes and looked around before reading the beeper again. Sure enough, his tired eyes did not deceive him. He figured his beeper had shorted out, as he had never been sent back and forth in one day without dropping the load.
Wally called technical support to let them know his beeper was on the fritz. The tech guy told him that there was nothing wrong with the pager and that he and his load of juice had better head back to California ASAP. Wally thought he'd better check in with the farmer back in Morro Bay.
When Mr. Duke found out Wally was still in Phoenix, he flipped. Wally was baffled and innocently asked what was up. His boss yelled, "$1,400, that is what is up," adding Wally better high-tail it back or he would never work in this business again.
Wally nearly shorted out: $1,400 per megawatt! He'd never seen a crop go for that much! Why, just last May, that same crop was selling for just $47. Unbelievable! Maybe going to Arizona with the electricity reduced the supply in California and made the market grow fonder. To Wally it seemed so pointless and wasteful.
As he reversed course and headed back to his home kingdom, Wally pondered the situation. Why would they order a crop shipment to Arizona if they didn't intend to even use it? And why would that same shipment suddenly be worth an astounding $1,400 back in California? Wally had seen a lot of strange stuff since the so-called free market was unleashed and driven by supply and demand. But this had to be the strangest. He decided to seek the counsel of his father the next time they saw each other.
Dec. 13, 2000 Wally was looking forward to working on home turf in California for a while, but as he was shaving the next morning, his cell phone rang. Wally's stomach tightened. He answered and heard it was Big Bob's voice, one of the farmers he often worked for, and he was screaming incoherently, something about "pinko bureaucrats." Wally wondered how Big Bob could complain given the price of the charged juice climbed steadily to heights never before attained. He suspected the unprecedented fluctuation of the market had pushed the man over the edge.
"Mr. Bob, sir, please slow down," Wally pleaded.
"Slow down!" Bob thundered. "For Christ's sake, we are on the brink of war!"
Wally held the phone out from his ear and heard him ranting and raving about those "commie feds" and other "muckity mucks," who not only temporarily slashed the price of the electrical crop down to $250 per megawatt, but would soon order all western energy farmers to sell into California.
"That piss-ant price would not even come close to covering the cost of producing the juice," he wailed. And as if that weren't bad enough, the old-time farmers like Peegee and Andy, who now bought and resold Big Bob's power-packed juice, claimed they could no longer afford to buy it.
Big Bob, cursing some more, said it wasn't his fault those "friggin' former farmers" weren't smart enough to cover their costs. Wally wasn't sure what he was talking about, but then remembered hearing one of his delivery buddies mention that the consumers' rates were frozen by Lord PUC and the other rulers, under the assumption that the retail price of the juice would fall under the new system.
And the king, known to all as The Gray One, knew that if he let the price his subjects paid for juice rise as steeply as the electricity farmers had raised their prices, then there would be an open revolt in the kingdom, and The Gray One might even be deposed as king.
Big Bob accused those "illustrious," California-born farmers of being nothing more than old dogs who couldn't learn new tricks. "They just couldn't compete so they had to plead for the King's protection," he snarled. Wally tried to object, given it was his family that Mr. Bob was now calling "old dogs," but just as he was about to confront his irate client, Bob told him to take the next few days off.
"Wow, an unscheduled break," thought Wally, who was used to having only scheduled vacations when there was a crop rotation or other maintenance times at the farms. "And I could really use some time off."
Wally woke up the next day bright and early as usual and was just about to jump into a business suit when he realized he had the day off. So he threw on some jeans, made a big breakfast and read the sports section of the newspaper. After that, he decided to head down to the local coffee house.
When Wally entered he couldn't believe his eyes -- it was packed to the gills with fellow delivery guys and gals, and many of his brothers and sisters. "Hey gang," Wally shouted. "What are all of you doing here?"
"We all got some time off. Isn't it great," said Willie the Watt, his arm around Wilma. "None of us are too sure how people are going to get their juice, but in this new system, we just do what we're told, right. They say take it easy, so here we are."
Wally sipped a latté and shot the breeze all day with the gang and later that evening went outside for a stroll. Less than a block away he ran into Hillary Hydro from Seattle. The region was hit with an Arctic blast and there had been almost no rain in December, seriously impacting hydro -- a huge source of cheap power for the region.
"Hey Hillary, what are you doing in our neck of the woods?" Wally asked.
Hillary told Wally that she got last minute orders from the powers-that-be to deliver their state-grown juice to California, pronto. "It is just so unfair. It is bitterly cold in Washington and we have to send our precious, limited juice to all of you in the Golden State so you can keep as many lights on in your house as you like. And all of you workers are sitting around coffee houses." And then she started to cry.
Wally tried to think of something reassuring to say, but he was at a loss, so he just handed her his handkerchief. She blew her nose and added, "And if that wasn't bad enough, all this intensive electricity farming is drying up our lakes behind the dams and turning our poor, endangered salmon into paté."
After a final, theatrical sniffle, Hillary composed herself. She said she was in a mega hurry to get back home, adding she hoped things wouldn't be so dim the next time they met.
Wally felt terrible. He walked slowly back to a bar, found an empty barstool and ordered a martini, extra dry. While nursing his drink in silence he started thinking about his parents. He promised himself he'd pay them that long-overdue visit.
While lost in his thoughts, Wally heard the voice of The Gray One. He realized it was coming from the television overhead and looked up. The Gray One seemed to be holding some kind of news conference. Wally listened as He railed against electricity farmers for charging too much for their crop, and for withholding thousands of desperately needed megawatts of juice from the kingdom.
"We are in an incredibly bizarre situation that shows how the market can be gamed and manipulated," His Grayness proclaimed.
Wally looked around the packed bar and also thought about his trip to Arizona and back. Things had changed since the farm was sold and the more he tried to make sense of it, the more confused he became. So, he resolved to talk to his parents and get some answers.
Dec. 14, 2000 -- Since selling off their farm holdings, Peegee and Andy Watt spent most of their time holed up in their large house in San Francisco. They weren't as busy as they once were. They still ran some farms, but mostly they just watched over their children, making sure the crops got to market safe and sound. When Wally arrived at his folk's house he walked inside. "Mom, Dad," he called, "anyone home?" There was silence and then he heard some stirring upstairs, so he bound up the staircase. Just as he reached the top of the stairs, his dad shuffled out of the bedroom in his pajamas.
Oh no, Wally thought, not this again. As much as Wally loved his parents, there was one thing he couldn't stand about them. They were incurable hypochondriacs. When his mom had the sniffles, she was sure it was pneumonia; when his dad had a headache, he was convinced he had a brain tumor. A lifetime of experience had taught Wally that their perceived ailments coincided with their incessant financial worries.
When Peegee and Andy saw Wally, they squeezed him tight, holding on for an uncomfortably long time.
"Son," Wally's dad said in a somber tone, "sit down. There's something your mother and I need to discuss with you. Something important."
A feeling of dread swept over Wally. He had a good idea of what was coming next. The drama.
"Wally, you know your mother and I have been plagued with health and financial worries all our lives," Andy said. "We have put up a brave fight, but things have taken a dramatic turn for the worse and we don't know if we will make it past the new year."
Wally tried not to roll his eyes or snicker.
His father looked at Wally more intensely and said, "Son, things have never, ever been this bad, and to make matters worse, we can't even pay our bills to the farmers. Here we sell our farms to those damned foreign growers, and they turn around and charge us more for the juice than our customers will even pay. We're stuck in the middle. We're broke, Wally, dead broke! Worse than broke, we're thinking about filing for bankruptcy because we can't pay our debts."
"Wh-, wha-, what do you mean?" Wally stammered in disbelief. "What about this house? What about all your fine jewelry, Mother, and the Cadillac in the garage, Dad? And your investors, can't they help you? What about all of your retirement money, have you spent all of that, too?"
"Oh no, son, we're just talking about the checking account. Income from the farms and other investments go straight into the retirement account, so don't you worry. The whole family shall be well taken care of in our old age," Andy said. "But there isn't enough in the checking account to cover our escalating debts to the farmers, not unless Lord PUC lets us charge a lot more for the juice, and I mean mega more."
Wally then remembered his trip to Arizona and back, and the extra time off that he had recently, and asked his dad to explain what was going on.
"Well, do you remember how Lord PUC used to make sure we didn't charge anybody too much for our crop?" Andy asked.
"Well, people assumed that with lots of farmers competing with each other, that would naturally lower prices. But they forgot about how much people need electricity, and about how they'll pay whatever they have to get it. Well, the farmers know this as sure as the sun rises, that if they just hold onto the crop until people are good and hungry, they can charge whatever they want," Andy said. "And these farmers don't have to obey the old rules."
"Well, why doesn't The Gray One just order the farmers to sell at reasonable prices?" asked a wide-eyed Wally.
A sad kind of look came over the faces of Andy and Peegee. They used to be so close to The Gray One, who would always answer their calls on the first ring. But these days, when Andy calls him, the phone just rings and rings.
Finally, Andy said, "I guess he's not all-powerful after all."
Wally wasn't satisfied with his dad's answer, but he knew there wasn't much more he could say. So Wally returned to his job, but vowed to visit his parents, who got sicker and sicker and sicker.
Jan. 17, 2001 -- During the next visit, Wally saw his parents jump as the phone rang. They looked worried. After a few rings, Andy cautiously picked up the receiver and said hello. Wally could hear the shouting on the other end of the line, "Pay up now or we will cut you off!" echoed a voice that Wally thought sounded like Mr. Reliant, one of the new electricity farmers.
Suddenly, Andy dropped the phone, and both Peegee and Andy started staggering around the room, moaning and groaning. While clutching their chest with a hand, they cried out in unison, "It's all over! We are finished!"
The scene continued for several more minutes, as a stunned Wally watched Peegee and Andy flail about the room, staggering to and fro. Even though the scene seemed surreal, Wally was genuinely worried about his parents and so he called 9-1-1.
Ten minutes later, just as the paramedics burst in through the front door, Peegee and Andy did one final sweep of their arms, pleaded with Wally to take care of his brothers and sisters, and collapsed. Wally jumped in the back of the ambulance and held on tight as it sped down unlit streets through dark neighborhoods that were victims of the dreaded "rolling blackouts." When he saw lights in the distance, he knew they were close to the hospital.
Later that night, while seated by the hospital beds where his parents were on life support systems, Wally's vigil was interrupted by a nurse who said that he had a call. He picked up the phone and heard the exalted voice of The Gray One. So now he calls, Wally thought, after all this.
"Wally, I was so terribly sorry to hear about Peegee and Andy," The Gray One said. "I never thought this problem I inherited would come to this. I had the misfortune of believing Our Great Emperor in Washington would resolve this crisis, but he refused to get involved in inter-kingdom affairs. But don't worry, I've got good news."
"What is it, sir?"
"We're going to deal with the farmers on your behalf. Me, the Lord PUC, all of us here in the capital. We are going to buy and help deliver the juice for you. What do you say to that?"
"Um, uh, that, er, uh, sounds just great, sir." After a long pause, Wally asked if he could ask a question. The Gray One replied, "Please, feel free." Wally asked him about what could be done about his mom and dad's mountain of debt. The Gray One said nothing but goodbye.
Wally was as confused as ever. He wondered what price the Gray One would pay for the crop and how long he would continue to buy the juice. What would happen to the experimental market that Wally adjusted to, and who would deliver the juice? Wally also worried about having a new boss.
Wally's head started spinning but stopped when he heard his parents troubled breathing. He wasn't sure if Peegee and Andy could hear him, but decided to tell them The Gray One had called to say everything was going to work out.
First Peegee and then Andy stirred in their beds and then they muttered something. Wally listened closer and heard his dad ask in a weak voice, "Will Joe Ratepayer and Bob Small Business bail us out again?"
Wally wasn't sure how to respond, as he didn't want to disturb his parents but also because he didn't know the answer to that question. He was just so unsure of so much these days but one thing he did know was that saddling Joe and Bob with his parent's huge debt would alleviate his parents sufferings and have the greedy farmers laughing all the way to the bank. But it was terribly unfair. He feared it could even lead to a rebellion.
Wally kissed his parents and told them to sleep. He tiptoed out of the room and into the blackened street. As he headed home, Wally started feeling sure his parents would recover and that the lights in the kingdom would come back on soon. At least he had hope.
As a heat wave baked the West Coast during the first week of August, Californians were startled to learn that the electrial grid was on the verge of overload. Any day could bring a "stage three emergency" where "rolling blackouts" would cascade through the state, shutting down cities wholesale.
Welcome to the current state of the electricity industry, where brownouts and blackouts are getting as common as visits from your relatives.
Companies that develop new power plants are anxiously waiting for states to permit new building. Some have broken ground in the last few months. These builders are not the ubiquitous U.S. utilities of yore -- they are deep-pockets companies that develop power plants in India, South America and wherever else capital flows and privitization is allowed. Developers, might, however, include a recent explosion of utility affiliates that are unregulated by state agencies and the federal government.
In California, a state much farther along in deregulating its electric industry, five plants have been approved so far, with another 19 holding formal applications. If built, those would produce 15,000 megawatts of power, theoretically enough to plug in 150 million new homes. Dozens more developers wait in the wings.
The new plants could be a great step forward if you depend on air conditioning and uninterruptable Internet access, or are a manufacturer or other big business. It does not bode well, however, for environmental quality.
Being left out of the equation is that fact that power plant development is inextricably linked with water policy, air pollution mitigation experiments with emissions trading, cries for environmental justice and threats to endangered species.
In California, no policy maker nor agency is investigating the huge environmental and economic effects of siting more than two dozen facilities. Instead, the new "merchant" plants are being approved on a case-by-case basis. Energy reliability concerns, real and perceived, are calling the shots, and the cumulative impacts of development being given short shrift.
To make matter worse, the authority of the California Energy Commission (CEC), which is responsible for licensing new plants, was limited by lawmakers last year. Local water boards, air boards and state wildlife departments like Fish & Game, may look at power plants individually, or on a regional basis. But all the agencies feed into the energy commission, which can ignore or embrace their concerns, as well as those of local citizens.
The new generation of merchant plants are by all measures state-of-the-art as far limiting pollution and resource impacts, but with so many on the table, concern is growing about the lack of consideration of cumulative effects.
"The cumulative impact issue is not getting its just review," said Marc Joseph, attorney for a coalition of construction unions called California Unions for Responsible Energy (CURE). The coalition has objected to many development projects being reviewed by the energy commission, taking tough environmental positions often disputed by CEC staff.
Like the coalition of environmentalists and unions in Seattle protesting the World Trade Organization, in the case of new power plants, unions are finding that saving the environment actually means keeping jobs, not taking them away.
"For construction workers in California, long-term economic success comes from sustainable development," explained Joseph. When water is used up and air quality offsets no longer are available "The first victims are the construction workers because they don't get to work on the next job."
As an intervenor in nearly every siting case, Joseph is probably the most concerned about cumulative environmental and economic impacts. He said the massive amount of construction jobs on any one plant is not worth it if the environmental impacts are too offensive.
The commission has wide latitude in its decisions, according to Steve Larson, CEC executive director. Most agree, however, that the commission's decision-making has yet to be influenced by the total weight of all these proposed plants. The most recent analyses try to address some cumulative concerns but staff is harried, faced with the abundance of cases that have a one-year deadline.
"There's some fundamental questions about where we're going with water policies and air offset availability," noted Bob Therkelsen, CEC deputy director, energy facilities siting and environmental protection.
Water -- the crux of California's development -- is often the most controversial issue involved in power plant siting.
Specifically, the most obvious cumulative concern in our semi-arid state is the use of fresh inland water to cool power plants. The state has a long-standing policy on water use -- that fresh water is the last choice for power plant cooling. However, it is not being enforced by the commission. The formal rule is called the State Water Resources Control Board Resolution 75-58.
The state Attorney General's office and CURE's Joseph are questioning the lack of enforcement of that 1975 policy. "When clean, high quality water is consumed by a disfavored use, such as cooling towers, this is nothing but reckless waste," stated Deputy Attorney General Nicholas Stern in a letter to the state water board.
Most of the water sucked up by power plants would come from the Sacramento-San Francisco Bay-Delta, the heart of California's water supply network and largest estuary on the West Coast. For example, the cooling towers of a recently licensed project near the Mojave Desert, the High Desert Power Project, would consume 4,000 acre-feet of Delta flow a year. That amount of water would fill a city block to a depth of 1,060 feet. On top of that, an additional 13,000 acre-feet of water would be stored in the region's groundwater basin for use in dry years. A facility in Kern County, the La Paloma Plant would use up 5,500 acre-feet of Delta origin out of the State Water Project's aqueduct.
Taking more water out of the Delta can impact water quality, and consequently supplies for cities, agriculture and ailing fisheries.
A coalition of state and federal water resources and wildlife agencies, known as CalFed, recently released a long -awaited blueprint for addressing the state's future water quality and supply needs. CalFed's plan, which is estimated to cost more than $10 billion over a 30-year period, does not factor in the guzzling of fresh water by new power plants. When water for cooling power plants is not coming from surface supplies, it is coming from groundwater. Groundwater can be pumped by new power plant owners from their own property or bought from water agencies.
One big cluster of plants is slated for California's Central Valley, known for its agribusiness and its oil fields. There are six plants proposed for Kern County alone -- trust me, that's a lot of power plants.
Most of these proposed plants will be using "banked" groundwater. The water is injected and stored in an aquifer with fresh surface water diverted from the long fought-over Bay-Delta.
Developers in the Central Valley, however, do not feel squeezed by water concerns. "People were fighting each other to sell us water," said Roger Garrett, the lead developer for PG&E Generating's La Paloma Plant. Another project developer, Sempra (the parent company of San Diego Gas & Electric and Southern California Gas), with its Elk Hills project, noted no opposition for water use.
If large quantities of water is not being used to cool power plants, a process called air-cooling is installed. But it is not a cure-all.
Cooling powerful turbines with fans uses a fraction of the water of evaporative cooling, but is not as efficient. More noteworthy for developers is the fact that dry-cooled facilities energy production losses occur during heat waves when power prices are highest. Air pollution impacts -- Vehicles are the primary culprit of California notorious smog, according to air pollution agencies but, power plants remain a significant source of pollution.
Some think that air might get cleaner due to the more stringent scrubber requirements for new plants.
According to Chris Ellison, attorney for some of the developers, "There are counter-intuitive benefits from these projects when their cumulative impact on the operation of older, less efficient and far more polluting facilities is taken into account." But, that assumes old plants will be retired and not used for peak electricity demand on smoggy, hot days
"There is some cumulative analysis, but any [air pollution] increases are hard to deal with," explained Sayed Sadredin, direct of permit services for the San Joaquin Valley Unified Air Pollution Control District -- site of the Kern County developments. He added, though, that even if cumulative emissions were noted, the district would only deny a plant's permit if there was a new violation of law -- but a denial is unlikely.
New power plant development has initiated recrimination between air agencies that are supposed to have the same mandate. For instance, air agencies downwind from Kern County take a much harsher view of new power plant development and ask for a wide-lens focus.
"The cumulative air quality impacts statewide if these projects [in Kern County] are approved could be substantial," noted a coalition of regional air quality control boards including San Luis Obispo, Santa Barbara and Ventura, calling themselves the South Central Coast Basinwide Coalition. They asked the energy commission to look at development in its totality. "Equally disconcerting is an apparent change in agency emphasis on permitting these projects, with less emphasis on energy conservation programs that could reduce the need for new power sources."
There are only so many air emissions credits in any one air basin, and that alone should limit plans for new power plant development. But it has not. The "bank" of air credits is rather murky, according to analysts.
Different credits have different life spans -- a credit from making a diesel-fired water pump more efficient has a life span of a few years, a credit from shutting down a plant is never-ending.
Two parties in the cases of siting power plants in the Central Valley, the unions and the South Central Coast Basinwide Air Pollution Control Council, question the validity of certain credits claimed by developers in the area. And Kern County is just one cluster of new plants.
"The air districts are not enforcing offsets," alleged the union's Joseph. He added that some of the offsets being claimed by power plant developers are so old they are no longer legal.
The Basinwide agencies cite Environmental Protection Agency disputes over some credits that the EPA says are unenforceable. Basinwide also contends that the total amount of credits are overblown due to calculations made by developers.
"Air credits are not as simple as they might seem on the surface," agreed PG&E's Garratt. He said that in creating those credits it may turn out that the process was incorrect and that one group of pollutants might be substitutable for another instead of rigidly being for one, like particulate matter, or another, like NOx.
There's also the critter problem. Again, taking Kern County as a model, where, for many humans, it's a flat, hot, uninteresting landscape punctuated occasionally by crane-like oil drillers. But to the San Joaquin kit fox and the blunt-nosed leopard lizard, it is home sweet home.
The energy commission is encouraging compensation of lands away from the power plants in the Lokern Natural Area -- three acres for every one that has permanent disturbance; 1.1 acre for every acre of temporary disturbance. That is, developers buy land at an increased swap ratio at a better site for critters than the already-destroyed oil fields on which they are, or want to, be building. "There is no habitat value [at the building site] to begin with," noted PG&E Gen's Garratt.
Plant construction is the most stressful for animals, with the potential for becoming road kill or having their habitat flattened by heavy machinery. But, Donna Daniels, environmental specialist with the California Fish & Game Department says she's "pretty happy" with mitigation on the potential sites. "A biologist will be present during construction if any habitat or animal is sighted and construction workers will go through species' sensitivity training."
While sensitivity training might seem an anathema to the burly guys who normally push around heavy equipment, both government agencies and developers say it works.
Wildlife issues in the central Kern County area are dealt with "simply by putting the power plant in the right place," noted Sempra's Rowley. That is, putting them in regional wastelands.
But then there is the "take" permit -- another way of saying the government will allow a developer to kill endangered species. If the on-site biologist and the sensitivity training fail and a species gets squashed or its habitat destroyed, that means the government has to bless the accident with a "take" permit -- small comfort to the dead kit foxes and blunt-nosed leopard lizards. Environmental justice is left to the people who live around and near the fossil-fuel fired plants, which are largely low-income and/or minorities.
Pressure to apply civil rights law to protect poor neighborhoods and communities of color from more polluting facilities is mounting from community activist and federal legislation. A 1994 federal executive order requires the EPA and all other U.S. agencies to develop environmental justice strategies.
"Environmental justice recognizes that we all have to bear our fair share of obnoxious facilities," said Sen. Richard Alarcon (D-Van Nuys). Alarcon authored a bill this year that would have required the energy commission to look at the cumulative environmental justice impacts, but it had its teeth removed while winding through the Capitol's corridors.
Cumulative economic impacts of multiple power plant siting are simply not contemplated. While the environmental impacts of these facilities are better understood -- even if not on a Big Picture basis -- economic impacts in the budding deregulated industry are not well grasped, nor predicted.
Cumulative impacts can make good economic sense for investors and benefit the economy. Cumulative economics can also mean sudden risk for both the specific investor and the state's economy on whole.
The California Energy Commission is not looking at the plants in cumulative economic terms because the financial risk is borne by the developer, CEC deputy director Therkelsen explained.
With electric industry deregulation, plants that may come to be depended upon by both the local economies and electricity consumers can simply sink out of sight with none of the usual regulators to demand that their owners stay in business as they did with the former utility-owned generation.
"It's the basic Faustian bargain. Policy makers said that the market will provide a reliable source of energy. But it may be [deregulation] is fatally flawed," the union's Joseph said, adding given the long lead times for building plants boom-and-bust economic cycles are inevitable.
Policy considerations of the deregulated market are just now being grazed by politicians -- meanwhile overwhelmed energy commission staff is trying to get a grasp on what all these plants mean to the state as a whole, while new power plants seem to be approved with alacrity.
Furthermore, drowned out in the cry for new power plants are calls for big boosts in energy efficiency, conservation, and greater use of renewable energy. "Renewables are a hedge against high fuel prices and an in-state source of reliable power," said John White, head of the Center for Energy Efficiency and Renewable Technologies. If White had his druthers, plant developers with the cleanest and most environmentally sophisticated mitigation proposals would be sent to the head of the power plant licensing line.
"We are suffering the consequences of the rush to build nuclear plants and dirty power plants," said Bill Magavern, Sierra Club lobbyist, of the recent push for siting multiple plants. "It will be a scandal if poor siting decisions are allowed."
J.A. Savage and Elizabeth McCarthy write for California Energy Markets.