J.A. Savage

Getting Off Our Nuclear Power Fixation

My favorite internet date site posits a question: "What is the best/worst lie you've told?"

Keep reading... Show less

Nuclear Meltdown?

Before the WTO demonstrations in Seattle, before Cancun and before the about-to-be big street demos in New York for the Republican Convention 2004, there was Diablo Canyon. Over 3,000 people were arrested trying to stop that enormous nuclear power plant. It finally went on-line in the 1980s. California earthquakes, a whole reactor installed backwards, and the unprecedented $5.5 billion in construction costs didn't stop it. But, the state of California just might find a reason to shut it down two decades later.

California is embarking on an economic and social test where other states have feared to tread. At the end of February, the California Public Utilities Commission starts to determine whether Pacific Gas & Electric's Diablo Canyon nuclear power plant is worth continued operations and customer investments. Other states have been cowed by the industry's assurances that nuclear power is safe, despite recent near misses, like that at Davis-Besse in Ohio, and that the federal government has everything under control at the Nuclear Regulatory Commission.

But is it worth it? Is it worth spending ratepayer's money to keep running nuclear plants despite all the risks?

Since the 2200 megawatt Diablo Canyon facility went live, the world has changed. Nuclear plants have been considered targets by terrorists. The marine life in the Pacific Ocean surrounding Diablo Canyon near San Luis Obispo, as well as the marine life adjacent to another nuclear plant on the Pacific near San Onofre, has been denuded as the plants suck up billions of gallons of seawater a day to be returned to the ocean at higher temperatures. Like many other nuclear plant owners across the nation, PG&E plans to store its increasing pile of high-level nuclear waste on top of the ground at the plant because the promised long-term national waste storage dump at Yucca Mountain, Nevada will likely never come to fruition. There have also been several earthquakes near Diablo's reactors, most recently 50 miles away in December 2003.

California has another twist -- deregulation. As long the costs of an accident are ruled out, nuclear power in the state has become cheaper than some other types of electricity, thanks to deregulation. With deregulation in 1996, nuclear-owning utilities were paid back for their risky investments. PG&E was promised it would get paid back for all its original $5.5 billion investment in the plant, plus interest and subsidies, which accounted to over $28 billion in a total bill to the utility's customers. That cost is out of the picture now and because of that, nuclear appears cheaper on the surface.

Triggering the state's inquiry into the risk and rewards of nuclear power is PG&E's intention to spend $706 million in the next few years to refurbish Diablo Canyon. That potential new flood of ratepayer money is causing the state of California to see whether keeping Diablo Canyon on life support is worth the trouble. California is home to plenty of alternatives -- state law requires 20 percent of power to come from alternative sources in about a decade. Environmentalists are beginning to discuss alternatives for Diablo's megawatts.

Diablo owner PG&E cites the nuke's lack of air pollution as a plus, but avoids any mention of the cost of radioactive leaks.

Recent federal estimates of nuclear fuel-related accidents in the Los Angeles area estimated that within hours a nuclear plume would disperse radiation almost 30 miles and assumes nearly 400 latent fatal cancers in one year. Clean up costs would easily run in the multi-billion dollar range. These are costs that are not reflected in the "operating costs" of Diablo Canyon when PG&E promotes its surface value.

That's where the California Public Utilities Commission comes in -- almost coincident with the 25th anniversary of the partial meltdown of the Three Mile Island plant.

The state may very well determine that running the aging plant is worth the economic and social risks, given the nuclear industry's history of heavy-handed lobbying. Then again, it could be a beacon for other states to initiate the same inquiry.

J.A. Savage is editor of the independent publication, California Energy Circuit.

Can Greenpeace USA Get Its Mojo Back?

Picture this: Little rubber Zodiacs sloshing up against giant ships dumping nuclear waste. Neoprene-clad environmentalists sneaking in to plug toxic waste discharge pipes. People putting their bodies between baby seals and hunter clubbers on northern ice floes. The Rainbow Warrior boat off to harass France's nuclear testing yet again -- until the government bombs the boat in retaliation.

These are fond memories of Greenpeace's subversiveness. While the venerable environmental organization remains a presence in many countries worldwide, Greenpeace USA misplaced its joie d'vivre a decade ago and has been limping along on international support.

"We lost the pirate to the bureaucracy," said Scott Paul, Greenpeace USA campaign spokesperson.

The last flamboyant US action dates back to 1989 when Greenpeace used its big toys to detour Trident II nuclear missile testing off Florida. Since then, Greenpeace has been a part of actions across the US, but has settled more comfortably into developing reports and lobbying in Washington DC.

This year, the Bush administration's attempt to turn publicly owned national forest tracks -- a land mass the size of Montana, Idaho and Wyoming combined -- into lumber and fuel for electricity is the arena where Greenpeace plans to get back into the hearts and guts of environmentalists and back on the front pages.

"Forest issues are heating up. This is bigger than the Watt years," said Paul, referring to the rabidly anti-environment former Secretary of Interior, James Watt, during the 1980s.

Greenpeace is bringing its international financing, its technological toys and "dinosaur" (as in elder wisdom) organizing skills to the front of forest issues in the US this summer. Expect mass arrests with celebrities along in 'cuffs. Expect forest occupations -- tree sitters and other mayhem -- to slow, if not stop, logging.

Even if Greenpeace doesn't get its Mojo back from these actions, it appears certain that it will be responsible for a well-trained crop of life-long activists.

Learning the Ropes

In a recent week-long training camp deep in Montana's Bitterroot Forest, 20- and 30-somethings learned the ropes -- both figuratively and literally -- of forest activism. Climbing trees, wilderness survival, interaction with, and protection from, forest workers, and of course dealing with the media, were all on the agenda. The camp had Greenpeace doing the heavy economic lifting, as well as transporting its solar-panel truck to back up the kitchen and the stereo system, the crammed electronics van with the microwave antenna and infrared sensors to detect incoming rednecks with malevolent intent in the middle of the night, and the necessary latrines. A coalition of 120 grassroots groups under the umbrella of the Native Forest Protection Alliance cosponsored the training camp.

Electronic survelliance for errant rednecks is serious business at training camps like these. In this part of the country they practice a different kind of discrimination. Posted on storefronts and saloon doors are signs: "No Earth Firsters Allowed. This is logging country." (All environmentalists appear to be Earth First!ers to them.)

Also in Montana -- in the stuff you can't make up department -- is serious public debate over the National Bison Range. Native Americans are making a pitch to take over its management. Many there are questioning the capability to protect the remaining bison.

"I spent all my money on tree spikes and beer," sang camp ringleader Mike Roselle around a post-training campfire." Roselle is a mountain man who often gets the bum's rush for his raw antics in the city. He helped found Earth First!, and in general, prefers to stir up shit than put on something that resembles a suit to lobby politicians. He knows his forests, his celebrities and the inside of several jails.

Greenpeace, with Roselle as pie-eyed piper, is aiming to lead activists back toward the Big Show, the visceral juxtaposition of good and evil that reaches for the public's gut, vote and wallet. Stunts, magic, and, at the very root of the activism -- a good time.

"It's serious business," said Woods, an activist from Berkeley, California, who spent his morning roping up and down tall Ponderosa pine. "But we're supposed to be having fun."

J.A. Savage is a frequent contributor to AlterNet.

A Nuclear Whistleblower at Home

Oscar Shirani just didn't understand when his former employer, Exelon, wouldn't stop its high-level nuclear waste container manufacturer. The containers, like the ones Shirani say headed for the Dresden plant in Illinois, are being filled with radioactive spent fuel and installed at nuclear plants around the country. Shirani fears the shoddy work will result in affecting the health of millions of people.

Despite their delicate and deadly cargo, the casks "are nothing but garbage cans" if their fabrication violates government specs, said Shirani.

Instead of giving him a medal for thorough work and dedication, Shirani says Exelon convinced him to transfer to another job and then, conveniently, laid him off. The self-described "company man," turned freshly minted whistleblower, might be able to do what anti-nuclear activists have been unable to accomplish -- pounding nails into the nuclear casket, forcing old plants to shut down. Then again, the federal government could acknowledge the alleged sub-standard work and hope the casks don't leak anytime in the next few thousand years.

The nuclear industry has turned to on-site radioactive waste storage in what's called "dry casks" in order to keep nuclear plants humming. Commercial nukes all have spent fuel pools. When those are filled up -- and most are at, or near, capacity already -- environmentalists expected the industry would be forced to turn off the plants.

Like a clogged septic tank, you have to quit flushing when it's full. But environmentalists were out-flanked by industry when it figured out a new "sewage" storage plan.

Industry hoped that it would have a permanent waste site at Yucca Mountain, Nevada, long before now. Nuclear plant owners, however, could see that a Yucca repository is a far off, if ever, possibility. They moved to simply build a new and different kind of above-ground septic tank.

What Shirani alleges is that those tanks (a company called Holtec designed them and uses U.S. Tool & Die to make them) are not being fabricated to Nuclear Regulatory Commission specs. While some believe NRC specs themselves don't provide much safety assurance, Shirani did.

"I thought the NRC was a big dog and a force," he said, but without the kind of oversight he maintains was thwarted, the safety of nuclear plants "is suspect."

Failure Points

Shirani's nuke casket story is akin to, say, ordering a new Hummer from the dealership. In the glossy brochure, the thick boxy steel can repel almost anything short of armor-piercing projectiles. But when you get the SUV home, you find it's made of glued fiberglass and spills passengers all over the sidewalk at every approaching pothole.

If the casks are shoddy, would they leak radioactivity and endanger public health? Shirani could only guess that it could affect "millions." Activists say they just don't know.

"Federal regulations should not make [Shirani], or us, or the NRC, or the cask owner guess about consequences," said David Lochbaum, Union of Concerned Scientists nuclear safety engineer. "The regulations require a certain level of performance and his findings were below that minimum level. It may not be that the cask will fail when challenged, but they are unnecessarily and illegally closer to the failure point."

Welds on the casks were performed by "unqualified welders" and materials control was inadequate for the casks, Shirani reported to Exelon in mid-2000. Fabrication engendered brittleness in materials, weakening them, Shirani notes. He maintains Holtec failed to report holes in the neutron shielding material. He allleges that Exelon "falsified" quality assurance documents and "misled" the NRC in last year's investigation of the problem. He found "hundreds of non-conformance items." Overall, he claims that what is being manufactured to hold nuclear waste is not what was approved in conceptual design by the federal government.

"I called my people in Washington and tried to get them to do something, but they didn't do anything," said Ross Landsman, NRC Region III inspector in a January deposition provided by Shirani.

"Every time I find some stuff wrong with any of the Holtec stuff, my brilliant cohorts in Washington say, 'Give them an exemption'," Landsman said sarcastically. "Holtec, as far as I'm concerned, has a non-effective QA (quality assurance) program and US Tool & Die has no QA program whatsoever."

Landsman added that the issues raised by Shirani on the casks headed for the Dresden plant had not been resolved, despite an August 2000 audit stating the problems had been fixed.

Cover Up?

Shirani had audited Holtec and its suppliers for the Nuclear Users Procurement Issues Committee, identifying what he calls "major design and fabrication issues" against Holtec in 1999 and 2000. He filed those with the NRC in November 2000. The NRC closed the allegations procedure a year later.

Shirani said he tried to put a "stop work" order on the casks' fabrication to no avail. Anti-nuclear activists have followed up on Shirani's claims, filing Freedom of Information Act requests to find out what the government did about these claims.

The activists are backing Shirani in his quest to get the NRC to look into the original allegations and their cover up through the NRC inspector general.

"The NRC has not contacted us," responded Brian Gutherman, Holtec manager of licensing. "The NRC did approve the design as a snapshot in time. We're allowed to make certain changes below the safety threshold." Gutherman said Holtec "is absolutely not concerned" about cask safety and potential leakage, and that between the NRC and Holtec's clients, "nowhere has anyone suggested such a thing." As for Shirani, Gutherman said, "He's just making things up."

If the casks are found to be fabricated below specifications, the NRC could simply let them be. "They could be accepted as is or get approval of the [changed] design. There could also be an exemption," said NRC spokesperson John Monninger. He added, though, there is a possibility the government won't let the casks be used at all.

Insider Information

Being a whistleblower isn't easy. You can be celebrated, like Jeff Wigand who revealed the dirt on tobacco purveyors Brown & Williamson and had a movie, "The Insider," made about him. Most likely, though, whistleblowers lose their livelihood, are mocked by their former peers and considered "eccentric" at best -- all this for deciding to follow the muse of conscience instead of the dominant paradigm.

"It's ethical cleansing," of the nuclear industry, chided Union of Concerned Scientists' Lochbaum -- a former industry man himself.

Shirani's former employer, Exelon, rejected the dust-up. "His case has been heard by numerous boards and agencies and it was dismissed. There is no substantiation for those claims," said Exelon spokesperson Ann Mary Carley She could, however, say that only the labor administrative review board has heard Shirani's complaints. The board's decisions are on appeal.

As a pro-nuclear power conservative company man, Shirani can't help still believing in the efficacy of the system -- but now he believes that the system can be flawed.

"Without the enforcement [of NRC regulations] I believe that we allow these people to spit on the face of quality and safety. This would be my top priority in my life more than my financial damage -- to see justice served."

Sidebar

Holtec casks approved, according to Nuclear Regulatory Commission spokesperson:

Pennsylvania: Exelon, Dresden
Oregon: Portland General Electric (Enron), Trojan
New York: Entergy, Fitzpatrick
Georgia: Southern Nuclear Operating Company, Hatch
Washington: Energy Northwest, Columbia Generating Station

Holtec casks in consideration by nuclear plant owners according to Nuclear Regulatory Commission spokesperson:

Alabama: Farley, Southern Nuclear Operating Company
Tennessee: Tennessee Valley Authority, Sequoyah
Arkansas: Tennessee Valley Authority, Browns Ferry; Entergy, ANO
Vermont: Entergy, Vermont Yankee
Louisiana: Entergy, Riverbend
Utah: Consortium of owners and utilities known as Private Fuel Storage for a potential waste site.
California: Pacific Gas & Electric, Diablo Canyon; Humboldt Bay.

J.A. Savage is an environmental economics reporter in the San Francisco Bay Area.

House Debates Orwellian Logging Bill

Log federal forests in order to save them? That's what the House voted to do Tuesday. Invoking the ghost of George Orwell, the Healthy Forests Restoration Act of 2003 encourages federal land managers to "conduct hazardous fuel reduction projects." In a 256 to 170 tally, the House would allow what environmentalists say will lead to logging 190 million acres the Bush administration claims are "at risk" of forest fire. It also limits citizen participation and authorizes another $125 million in industry subsidies. The Senate plans to take it up in summer.

"We call it the 'Healthy-Stealthy' Act," explains Andrew George, National Forest Protection Alliance campaign coordinator. "It allows logging in the forest when logging is one of the single greatest causes of fires."

Environmentalists allege it hands prime forests, including ancient trees, to the timber industry and will lead to decimating precious public lands. Rep. Scott McInnis' (R-CO) HR1904 uses community protection as the Act's raison d'être -- stopping fires from burning down homes and structures at the fringes of the forest. Instead of addressing the development/forest interface, the bill "does nothing" to protect communities, according to George.

Pro-logging forces, like the American Land Rights Association, admit the bill will also allow the US Forest Service and Bureau of Land Management, "discretionary authority to limit [environmental] analysis ... meaning the agencies would not be required to analyze and describe a number of different alternatives to the preferred course." The Association adds in a letter, "This legislation is crucial for protecting our air, water and wildlife from insect infestations and catastrophic wildfires."

The Society of American Foresters agrees, pointing to, "80 years of the accumulation of fuels -- dead vegetation and overly dense stands of trees" leading to an "all-time high" potential for fires.

The "stealthy" part of the Act comes from supporters like these who greenwash their intent, say environmentalists. "The greenwashing starts in the bill's title," said Matthew Koehler, Native Forest Network campaign coordinator. He said the proposed legislation would implement the Bush administration's Healthy Forest Initiative launched last summer -- following the 2000 wildland fire season, one of the worst in a half-century -- using the "guise of protecting communities while severely curtailing citizen participation."

Underlying the administration's urgency is its public complaint that environmentalists delay logging plans.

In a federal report out May 14, environmentalists were apprised that if delaying logging is their strategy, they are lousy at it. Of the "fuel reduction" plans that environmentalists appealed in the last two years, two-thirds were approved as planned and only 10 percent were reversed. But in so reporting, the investigative arm of Congress, the General Accounting Office (GAO), also noted that if environmentalists' delay tactics are the reason for stripping out public input in the Healthy Forests Act, than that too is a canard.

Koehler said that at least the GAO report put the lie to the Bush administration's claim of "analysis paralysis" in invoking the necessity of the Healthy Forests Act.

Another key greenwashing in the Act is in the form of Undersecretary for Natural Resources & Environment, Mark Rey. Both environmentalists and the Act's author consider him an important facet of the Bush administration's logging initiative. Environmentalists point to his background as a timber lobbyist for nearly two decades and the author of two pieces of anti-forest legislation. The first was passed into law in 1995 allowing clearcutting ancient forests in the Northwest. The second was not passed. It would have made environmental standards "unenforceable" and fined citizens up to $10,000 for filing appeals, according to the Native Forest Network. "This is the guy behind the rollbacks" of forest environmental rules, noted George.

"If the Act passes, it would be considered implementation of the administration's plan," said Koehler, who characterized the bill as one of several that are "payback" to campaign contributors. According to the Center for Responsive Politics, the timber industry contributed $4.6 million to politicians last year -- most of which went to Republicans.

"The Bush administration has been good at greenwashing -- good at using people's fear of fire to limit opposition," said Koehler. "It has also sold the American public a false bill of 'analysis paralysis.' That's the level they'll go to to ensure we will see more logging on public forests."

J.A. Savage is an environmental economics reporter who has also worked as a forest firefighter. For more info, visit ForestAdvocate.org and NativeForest.org. To take action, visit WorkingforChange's Action Page.

Canary In a Data Mine

tia logo

A few items at the local Wal-Mart find their way into your basket--a computer hard drive, a wrench, a discounted Halloween mask, a gallon of lighter fluid, and a CD of The Coup’s album Party Music. You look in your wallet. No cash. You pay with the ATM card. The bored woman at the register asks for your zip code, and, distracted, you give it to her.

Wal-Mart’s streaming data secrets your purchase data to Arlington, Virginia, where it hooks up with a speeding ticket you got at the Canadian border last week and your subscription to The Nation. Next thing you know, two FBI agents are at your door with probable cause to sift through your belongings. They find a small bag of pot your old roommate left behind and a copy of the book "Bomb the Suburbs." Your patriotism is suddenly questioned at headquarters.

IAOThis scenario is being painted by even those only moderately fearful of how the new Total Information Awareness program under Defense Advanced Research Projects Agency (DARPA) will work with the new, encompassing, Homeland Security Act. TIA’s intended purposes is to catch potential terrorists before they strike. While the moderately fearful have their point, computer-savvy techies say this scenario isn’t likely to happen--yet.

"It’s the Three Stooges Go to Data Mining School," says Paul Hawken, environmental/capitalist and chair of Groxis, a data mining software company.

"The good news is Americans don’t have much to fear soon," Hawken says. "It will take 10 years to get going." In addition, "the brilliant, cutting-edge technology companies won’t touch this," he says. "DARPA’s going to get the second-rate companies."

Those companies, like IBM that Hawken calls "second rate," have repeatedly received government contracts leading to billions of dollars worth of technology that doesn’t work. IBM, for instance, wasted much of a $15 billion contract on upgrading the nation’s aviation system a decade ago.

In late November, Hawken was approached by DARPA with a request to allow the military to license Groxis. Hawken said no. As far as he knows, his company is the only one to publicly decline the millions of dollars involved with licensing data mining software to the government for Total Information Awareness.

"We got a lot of e-mails from companies--even conservative ones--saying, ‘Thank you. Finally someone won’t do something for money.’"

But the rest of those companies, the IBMs of the nation, will be happy to go along with DARPA’s plan. "All those vendors whose stock has crashed in the last few months are rubbing their hands at the tons of pork," said Cory Doctorow, the Electronic Frontier Foundation outreach coordinator.

So far, a traditional technology company, Booz Allen Hamilton, has been awarded a contract by DARPA to start technology integration. Telcordia, a communications company and Cycorp, which has a sort of artificial intelligence product that sorts questions and answers have also been hired, according to DARPA spokesperson Jan Walker.

While those companies might waste taxpayer money, they may still be able to get the job done. Doctorow and others believe the data mining necessary to compile dossiers on the public is feasible. DARPA doesn’t even need supercomputers. It can set up a basement full of white box PCs to crawl through incoming data.

There are two main technical questions. Can software make sense of it in a way for government agencies to use without being overwhelmed by nonsense and can the vast numbers of sources of data agree on ways to talk in the same language?

It’s not simple, but it’s also not very high-tech, according to Doctorow. "It’s like how to get Sears and Macys to agree on a Dewey Decimal system."

Yet, government isn’t good at figuring out even the most basic technology. One of the first aspects of the Homeland Security Act to be made public was that the 22 agencies involved will have to set up a common e-mail system so they can talk to each other--presumably they cannot do so now and have yet to discover Yahoo! groups.

According to DARPA, after the e-mail system is in place, the plan is to gather "transactional data" on individuals, including information about their financial, educational (such as high school permanent record), travel, medical, veterinary (terrorist cats?), transportation, housing and communications activities.

But even if they are able to pull all this information together, compiling data in one massive center as DARPA plans is unlikely to catch the intended terrorist targets. The military and the big technology companies expected to sign onto the Total Information Awareness program are structured in a way that could well thwart the initiative.

"The response of this administration is to build a new hierarchy, when the [model] is the flat framework of al Qaeda," said Paul Saffo, director of the Institute for the Future and a technology sage. Because al Qaeda works in small relatively independent cells, it's unlikely TIA would uncover an entire network.

Putting all that information in one hierarchical, centralized situation could very well backfire, especially if more and more people start getting knocks on their doors. Many Americans are used to being able to do as they please and while they seem relatively complacent now, if all this data gathering starts to impinge on their daily lives, they could start holding politicians accountable.

Hawken expects TIA to have an enormous error rate, one that Americans will not endure. "The error rate is ten to the third power. That means for every person TIA identifies who might possibly have information leading to something that could have the potential to affect security, it’s mistakenly identifying at least a thousand who are totally innocent. The error rate comes from the problem with inferring meaning from the information, not the tracking of the information itself.

"Yes, all this data can be mined. But then what?" Hawkins asks. "You have to sort, analyze and make sense of it. I don’t think anyone knows how it’s going to work."

That doesn’t mean the military can’t pull it off. TIA was granted $137 million to spend in the next fiscal year and expects to have a research prototype in five years, according to DARPA’s Walker.

Much has been made of the director of the Total Awareness Program, John Poindexter, whose reign as President Ronald Reagan’s national security adviser was most noted for his hip-deep involvement with Iran Contra. He was convicted, and his conviction was overturned. Saffo calls him "extraordinarily smart" though "vile." "But," Saffo says, "he knows his information technology."

"There are ways in which technology can help preserve rights and protect people’s privacy while helping to make us all safer," said Poindexter in a speech this summer. He gave no specifics.

If the government can pull off the technology, at its very core, the technology has to have a set of criteria that defines potential terrorism. It’s doubtful that a chief executive officer of a corporation that pollutes drinking water, for example, will be considered a terrorist. The set of criteria will be based on the current government’s ideology. This means that basically anything that questions the government or government policies can be programmed into the computer to turn up a terrorist.

Hawken asks, "Is a terrorist someone who opposes a proto-fascist government in D.C.?" If he asks the question, does he get put on the list?

In any event, Hawken and others say that anyone who actually isa threat to U.S. security can easily learn to evade any Total Information Net. For at least the next five to 10 years, while the government fumbles with its computers, so can the rest of us.

J.A. Savage is a regular AlterNet contributor and former tech reporter.

Roots of Discontent

One of the most active places for responsible environmental militancy this summer and fall is in a remote corner of Northern California. Dozens of people have risked their lives and their economic future security and given up huge chunks of their daily existence to stop environmental damage from intense logging, including significant amounts of ancient forests.

"Common sense and reason are insufficient to effect social change," says Randy Hayes, director of Rainforest Action Network.

And the activists are indeed causing a ruckus in their attempts to effect change. They are in the corporations' faces and the government's crosshairs. They get arrested, tear-gassed, pepper-sprayed. They're loose cannons, non-strategic thinkers. They have been branded "eco-terrorists." Far from being Sierra Clubbers, they consider themselves the brutal soul of the environmental movement.

Hayes and a handful of other graying environmental leaders hold up militancy as a good thing -- unless it's really stupid and then Hayes admits he tries to distance the organization from any embarrassment. He makes the distinction, however, between "responsible militancy" and anarchy. "I don't hide my face."

The corporate adversary is Maxxam, which owns land on which some of the last vestiges of ancient redwoods and Douglas fir still reign. Activists haven't yet stopped Maxxam from logging a potential 32,522 acres this year, but living in treetops and flailing their bodies in front of logging machinery, they aspire to bloody well do something about the devastation the lumber company has wreaked upon California's North Coast.

Julia Butterfly Hill, who spent two years perched in a redwood tree named Luna, is the most famous of the protesters. Now, after her, there are many more treesitters. Some take their cue from Hill and remain aloft for months; others put up strategic short-term tree occupations just in front of current logging operations. Both types know that one false move and they end up a pile of broken bones 100 or so feet down. Indeed, one tree sitter fell to his death in October.

Add to that anti-logging tactic now is a hunger strike. "I had my backpack packed about three weeks ago to go sit in a tree," explains Susan Moloney, executive director of the Garberville-based Campaign for Old Growth. "I can take to a tree and stay for two years and maybe I'll protect that tree, but there are not enough people to protect all the trees." She estimates there are only seven million ancient trees left.

Her hunger strike, taking place from a lawn chair at the steps of the California State Capitol, is intended to get California Governor Gray Davis' attention. Moloney insists that Davis own up to a promise he made in 1998 to ensure that "all old-growth trees are spared from the lumberjack's ax."

While Moloney starves herself and the treesitters face a chilling winter season of wind and rain, Maxxam continues to fell trees at an alarming rate -- despite two court orders to stop operations and with the support of two California regulatory agencies managed by the governor's appointees.

Louis Blumberg, spokesperson for the California Department of Forestry & Fire Protection, defends Davis: "The governor has followed through with the promise," he says. "It was made at a time when he was trying to consummate the Headwaters Forest deal which brought the largest grove of virgin redwoods under state control." The Headwaters deal had state and federal taxpayers pony up $380 million to save 7,500 acres of ancient redwoods from Maxxam's logging operations.

State regulators have a curious relationship with Maxxam. The Department of Fish and Game has sent wardens to help Humboldt County sheriffs and Maxxam security forces. Earth First! reported that while temperatures were in the 40s, law enforcement, including DFG wardens, poured cold water 10 times over four hours on protesters. DFG again helped the county sheriff, chasing protesters with dogs, helicopters and all-terrain vehicles, according to Jack Nounnan, a 71-year-old activist. Maxxam's Pacific Lumber spokesperson Mary Bullwinkle would not confirm or deny the reports. "We did chase people around on foot," admits James Barton, assistant DFG chief, Region 1, who adds, "I'm 99 percent sure" marshals weren't in the helicopters or pouring water on protestors.

In April, Maxxam's logging subsidiary Pacific Lumber president and chief executive officer Robert Manne asked the Humboldt County Board of Supervisors to apply for anti-terrorism funds through the federal Homeland Security Act to fight what the company branded "eco-terrorists" on its property. Humboldt County Sheriff Dennis Lewis' spokesperson said that Manne's request is "not currently active."

But the lack of interest on behalf of county officials hasn't deterred Maxxam/Pacific Lumber. "In April, when I warned the supervisors that eco-terrorism was coming to Humboldt County, there were those who scoffed," Manne stated in August, after protesters locked themselves into a car at the entrance to the company's office. "This kind of activity," he stated, "fits a pattern of behavior that the Department of Justice will be keenly interested in reviewing."

Meanwhile, on the Capitol steps Moloney is one of the few forest activists who uses her real name. Most treesitters are known only by monikers like "Remedy" or "Wren."

"They have their forest names. I learn their real names when they get arrested," says Nounnan. Since late 2000, there have been about somewhere between 50 and 70 arrests related to logging protests.

Maxxam is pursuing not only criminal arrests for trespassing, but civil suits against protesters, as long as the company can find out their names. Considered by some outside of the corporation to be a SLAPP suit (strategic lawsuit against public participation), Maxxam filed its civil suit in April 2001 with a long list of empty spaces for names of future activists -- John and Jane Does. They have been adding new names rapidly -- from the original nine to about 60. Maxxam left room for up to 200 unknown names in the civil suit and adds one every time someone new is arrested.

"As they're arrested, jailers serve them with the [civil] lawsuit," explains attorney Jay Moller, who represents many on the civil lawsuit, which he does not consider a SLAPP suit. "You can sue someone who trespasses on your land and causes you damage."

What Moller feels is overkill on Maxxam's part is the damages the lawsuit portends. Assuming most activists have few assets, the civil suit calls for paying back Maxxam for the time and cost of logging not completed.

"There's a variety of damages sought," says Pacific Lumber attorney Paul Brisso. "By blocking access of contractors and subcontractors, there's a substantial amount of damage just in down equipment time, helicopters and crews idled." He's in the process of tallying up a total, which could run $100,000 or more. "These people entered into a conspiracy," Brisso said.

"Nothing I'm doing is illegal," says Susan Moloney. "I'm not trespassing or breaking any laws." But as a non-violence trainer, she sees many activists who do break the law, and she calls them "my absolute heroes." And she respects them for hiding their true identity given the risks involved.

Rainforest Action's Hayes advises the activists to keep on acting on their convictions. "Whose hands are on the chainsaw?" he asks. "It's not the workers who cut down trees. It's the corporate executives who don't give a damn about survival of the earth."

The Shipping News

In the second week of a shutdown that has closed 29 ports on the West Coast and is costing the U.S. economy upwards of $1 billion a day, the Bush administration amplified its involvement in the dispute between the International Longshore & Warehouse Union and the Pacific Maritime Association, by forming a "board of inquiry."

This is the administration's likely first step toward invoking the controversial Taft-Hartley Act, which would force union workers back to work for an 80-day cooling off period.

On Sept. 29, shipping company representatives locked out 10,500 union members, accusing them of staging an illegal work slowdown.

At issue in the dispute is the PMA's use of new port technology. ILWU spokesperson Steve Stallone says the conflict revolves around a disagreement about roles and who controls technology and information that affects the workers.

"We want to be able to review the data -- usually there are 50 pieces of information on each container and we've found that with 30 percent to 40 percent of the information something is wrong," Stallone says. "We want that to be our work. We want a closed system where only union clerks can get into it and manipulate data."

Shippers, however, want to allow non-union eyes on the data. "They want to use the technology to outsource the jobs," Stallone claims.

According to PMA president and CEO Joseph Miniace, the shippers "guarantee job protection for every registered worker who may be impacted by technology."

What's really at stake, say union watchers, is the survival of what many consider the most politically progressive union in the country.

"We support farmworkers and El Salvador, and even Nelson Mandela credited the union for kickstarting the American anti-apartheid movement," Stallone says. The union refused to allow military cargo to be shipped to the El Salvadoran dictatorship in the 1980s and its dock actions highlighted South African divestment.

The union has weathered repeated strikes, government intervention and employer/government violence since its post-Depression makeover. A 1934 strike led to "Bloody Thursday," in which two workers were shot and killed. Then, shippers employed "goon squads" -- commonly referred to now as "security" -- as well as the National Guard, to rough up strikers. Six men were shot or beaten to death during the strike and hundreds were arrested.

This led to a four-day general strike involving all local labor interests that basically shut down San Francisco. Eventually, the ILWU won its issues in arbitration.

"An injury to one is an injury to all," read a banner hoisted during the 1948 strike. The motto is emblematic of the ILWU's socialistic bent and its methods of organizing alongside other unions. Events leading to that strike caused Congress to pass the anti-labor Taft-Hartley Act. Included in the Act was a provision, later overturned, that required labor leaders to declare they were not Communists. Accusations of Communist ties became a tool used in corporate and government attempts to destroy unions. ILWU leader Harry Bridges was hauled before the Supreme Court twice in attempts to deport him (he was originally from Australia) for being "a Commie."

Many strikes and lockouts and more violence later, union members can now lead a middle to upper-middle class lifestyle due to hard-fought changes wrought from industry. Still, the work is not full time and it is often bone-crushingly dangerous.

"You don't work a regular job. You go to the hiring hall and if a ship is in, you work," Stallone says. He said some members work full time, mostly at the Los Angeles and Long Beach, Calif. docks. And one has to consider the risks workers face to earn their legendary high wages.

"Five people died in the last six months in California," Stallone says. "One was smashed by a machine so badly it took three days to identify the body. ...The docks are full of huge pieces of equipment so when you get hurt, you get hurt big." All the thundering movement of big containers from ships to trucks to warehouses is conducted in a brain-numbing haze of inescapable diesel exhaust.

Negotiations have ranged from the heavy-handed to the ridiculous. In June, a White House Task Force including the Labor Department and Homeland Security secretly threatened to take away ILWU's right to strike; and the Los Angeles Times got a Labor Department official to confirm the tenor of the meetings. Negotiations continued off and on from there.

On Oct. 1, union reps walked out of a meeting when PMA representatives showed up with armed bodyguards.

And then there was the fart machine. At one negotiating session, there was a repeatedly audible, although odorless, passing of gas that was finally traced to an electronic whoopee cushion under the table. "There are some good old boys on the safety committee," says Stallone. "They said, 'Everything they're putting on the table is a pile of shit so we added the soundtrack.'"

The PMA represents 71 shippers and terminal owners, most of which are not based in the U.S. They are highly capitalized industries with expensive ships.

The PMA, however, is in a delicate position.

Stallone paraphrased former union leader Bridges in explaining how the ILWU can exercise its power: "We sit on the artery and all we have to do is pinch."

Since Bridges' reign ended in 1977, that artery has become engorged with world trade. All the World Trade Organization's work to bring down barriers between countries for the flow of goods has resulted in a huge increase in container ship traffic. And, note the "International" in the ILWU. This lockout is on West Coast ports, but union docks all over the world can play a role. Until the shipping owners build their own docking and transportation infrastructure, or figure some way to claim it from local ports, the ILWU will have some leverage.

If Congress and President Bush want to bust the union as Ronald Reagan did with the air traffic controllers, they will have a much more difficult time with ILWU. Remember the "injury to one is an injury to all" line? That sort of organizing endears the union to other powerful unions.

The AFL-CIO, a federation of 66 unions, is making the survival of ILWU a priority by sending staff to bolster the ILWU's bargaining position, according to an August resolution. Its president John Sweeney condemned the lockout and asked the Bush administration to refrain from intervention. "The teamsters told Bush, 'Don't do it,'" added Stallone.

Taft-Hartley is widely viewed as anti-union, and some say Bush's use of it could risk a backlash from organized labor against Republicans in November's congressional elections.

And while many politicians are ready to use federal authority to control the docks due to the current economic implications, labor still has friends in Congress. In an attempt to dissuade Congress members from supporting federal intervention, California Democrat George Miller wrote that, "Taft-Hartley is rarely employed and is properly viewed as an aggressively anti-union weapon for undermining the collective bargaining rights of working people."

J.A. Savage is senior correspondent for the independent publication California Energy Markets.

The Original Mean CEO?

Long before Ken Lay was squandering his employees' 401(k) plans, Charles Hurwitz was pioneering the pension fund raid of about $55 million, money that had been set aside for lumber workers in the economically challenged rural north coast of California. Before WorldCom’s Bernie Ebbers allegedly mismanaged the $100 billion company into bankruptcy, Charles Hurwitz was at the helm during the $1.6 billion collapse of a savings & loans. Prior to Aldephia’s John Rigas ever dreaming he would be led away in chains, Charles Hurwitz’ company was investigated for its responsibility for the death of logging protester David Chain. Lagging, however, was Hurwitz dismissal of corporate accountant Arthur Anderson -- he waited until four months after the Enron scandal to let the firm go.

If there were a role model in business school for sheer corporate meanness, Charles Hurwitz as chair and chief executive officer of Maxxam, would be featured prominently -- according to tenacious Hurwitz watchers. Hurwitz is proof that while Lay, Ebbers and Rigas may all be guilty, they're not original.

Maxxam spokesperson Josh Reiss, after verbally attacking this journalist for even considering a comparison of Hurwitz’ legacy and ongoing operation to the spate of current high-profile corporate miscreants protested, "To say that you’re lumping of Mr. Hurwitz [in with the others] is bizarre, absurd."

Hurwitz, has developed a loyal (or disloyal, depending on how you look at it) following of critics in the last 15 years. The core of inquisitive souls after Hurwitz centers in Humboldt County, California. Most of the nation knows Humboldt County as the font of all things hemp. But its rugged forest land and the ripe climate for trees to turn to lumber has been its more traditional economic base. Hurwitz moved into the rural area with a swagger and arrogance that Ken Lay and his minions barely touch, according to the Hurwitz watcher network. Unlike the other CEOs in the news for various transgressions, Hurwitz is still getting away with it.

In 1985, the sleepy, well-fed, well-manicured, company town of Scotia, California, got a rude awakening. Its bread-and-butter, the Pacific Lumber Company was taken over by Maxxam. It was a classic "greed is good," 1980s’ event. The little logging company had a lot of land on which grew giant redwoods. The little logging company had been harvesting redwoods in a manner that allowed re-growth on a long-term basis. In other words, there were still giant redwoods as far as the eye could see. What Hurwitz apparently saw were chainsaws turning those trees into lumber for cash to pay off the high-demand junk bonds used in the little logging company’s takeover. The company doubled its rate of logging, according to the Environmental protection Information Center, a local watchdog group. A company document listed the 1997 tree cut rate as 253 million board feet. That’s a lot.

By threatening to cut down some of the vestiges of the ancient forest, Maxxam was able to cut a deal with taxpayers to buy out some of its property to avoid logging. The Headwaters forest, about 3,800 acres, cost taxpayers in the vicinity of $400 million in debt-for-nature swap. Also part of the deal is a Habitat Conservation Plan. According to Maxxam, the March 1999 debt-for-nature swap agreed to include managing its forest on 100-year sustainable level. However, in recent documents to shareholders, Maxxam complains about that 100-year sustainability clause for causing the company’s fortunes to decline.

Neighbors have complained and filed lawsuits over the effects of increased logging. It’s not just the barren hillsides that once hosted lush forests and wildlife, including the spotted owl, but the increased flooding that have severely impacted some of the local community.

A lawsuit by Earthjustice and Environmental Protection Information Center from July 2001 charges Maxxam’s Pacific Lumber with illegal dumping and violating the Clean Water Act on the 6,000 acre Bear Creek watershed. The case is still in federal district court, according to Earthjustice attorney Mike Lozeau.

There was a fatality. The disloyal Hurwitz watchers got under the company’s skin with their incessant logging protests, most notably that embodied by tree-sitter Julia Butterfly Hill. In 1998, logging protestor David Gypsy Chain was killed by a tree felled during a Pacific Lumber logging operation. After a three-month investigation, the Humboldt County Sheriff decided not to press charges against the company. Hurwitz watchers called it a whitewash. Remarkably, tree sitting and logging protests continue to this day on the company’s territory, according to Earth First! organizer Darryl Cherney.

In addition to the chance to plunder the forest, Hurwitz also seems to have noticed the company workers' well-stocked pension fund. In an era before 401(k)s, Pacific Lumber had set aside money for its workers’ retirement. When Hurwitz took the company over, the pension fund disappeared as far as the workers were concerned. Later on, right before Christmas 2001, Hurwitz laid off 10 percent of the logging company’s workforce.

Maxxam also had a bit of a worker problem with a subsidiary, Kaiser Steel. Maxxam bought the company in 1988, when it was still in hungry buy-out mode ofter the Pacific Lumber take-over. But by 1999 and into 2000, the company locked out Kaiser steelworkers over labor demands for 19 months. By early this year, Kaiser had filed for Chapter 11.

Even before the logging and the labor disputes, Hurwitz was in trouble for his business practices. Two federal agencies, the Treasury Department’s Office of Thrift Supervision (OTS), and the Federal Deposit Insurance Corporation, have brought actions against Hurwitz. Hurwitz allegedly had a hand in the demise of the United Saving Association of Texas in 1988. Backed by the FDIC, OTS was seeking $820 million against Hurwitz. In September 2001, an OTS administrative law judge recommended Hurwitz and the company be cleared. Hurwitz, via Maxxam, filed counter claim against the FDIC earlier this year. The agency has yet to make a final decision.

And after all that help from taxpayers, all that raiding of workers’ pension, all that nasty flooding from all that wicked logging of giant redwoods, what does Hurwitz have? As far as Maxxam goes, its latest report to the Securities & Exchange Commission show a shaky operation at best. In the first quarter of the year it showed a $55 million deficit. Meanwhile, a statement from last year to stockholders reveals Hurwitz has a total package of $1.8 million in income--$786,000 in salary, $910,000 in bonus and $142,000 in "other" recompense.

"The master of the shell game is a shell of itself," noted dogged Hurwitz watcher Cherney. And the shell games eventually fold.

Hurwitz still shows up in the Houston society columns -- same as George W. and Ken Lay -- according to Cherney. Whether the CEOs currently in the news for corporate malfeasance actually paid that much attention to Hurwitz' career path is unknown. But Hurwitz's past shows that the kind of "corporate creativity" that leads to forgiven personal loans, accounting tricks and general hubris has its biography.

Still, Hurwitz remains different from Kenny Boy and some of the other CEOs. Hurwitz remains, somehow, unscathed.

More information can be found from Hurwitz watchers at www.jailhurwitz.com.

Halfway to Yucca Mountain

Utah's Skull Valley is already a busy place. All arround it, the Air Force makes practice blasts in its Hill Bombing Range. Dugway Proving Grounds tests chemical and biological weapons. There's a Safety Kleen hazardous waste incinerator and landfill. The Deseret Chemical Depot stores weapons and the Tooele Chemical Demilitarization Facility burns 'em.

If the Department of Energy gets its way, Skull Valley will also be the home to so-called "temporary" high level radioactive waste on its way to the permanent waste dump in Yucca Mountain, Nevada.

With the Senate set to vote June 5 to override Nevada's veto of the Yucca Mountain facility -- the House already voted overwhelmingly to ignore Nevada's preference -- the people who live in Skull Valley are getting increasingly nervous.

The fate of Yucca Mountain has grabbed all the headlines. The fate of Skull Valley is barely a blip on the national radar. No matter whether you think the Nevada site is a good or bad place to store waste, at least it has big plans to use the best technology available, bury the waste deep underground and monitor it. Skull Valley doesn't.

At Skull Valley, waste would be shipped by rail in containers and set above ground next to the bombing range. The technology would consist of some concrete and steel and a chain link fence. The plan calls for the area to hold -- for 20 years with a 20-year extension -- enough nuclear waste to accommodate all the spent fuel for every reactor in the nation.

"If there's enough focus on Yucca, they can sneak Skull Valley in there and buy Yucca 40 more years," said Sammy Blackbear, a Goshute Indian opposing the storage site.

The only way the Department of Energy could get a lease for this halfway-to-Yucca storage site so quietly and efficiently is because it is owned by Native Americans -- the Goshute Tribe, whose Skull Valley members number about 130. Of that, 70 are voting members with authority over 18,000 acres. Fifteen have filed litigation to stop the proposed radioactive dump.

Native Americans' governments are sovereign unto themselves. As such, they don't have all those pesky laws that the State of Nevada, for instance, and even the Department of Energy and Nuclear Regulatory Commission, have for environmental protection and public process. None of that applies to the Goshutes.

The legal complaints allege federal support for a Tribal Council of three whose chairman was recalled by the tribe, but returned to power by the Bureau of Indian Affairs in 1994. The chairman, Leon Bear, convenes an "illegitimate regime," according to filings, which "remains in power through bribery and corruption." However, when pressed for specifics, Blackbear said he couldn't release the material due to the current court battle.

Tribal chairman Leon Bear cited in a statement the potential flow of money from nuclear waste storage to the Goshute, which everyone involved agrees is impoverished.

"For a long time the tribe has been pretty much distressed over revenues that they don't have, lack of infrastructure of the tribal government. And we were looking for economic benefits or development for the tribe."

Those revenues would be provided by Private Fuel Storage, a consortium of reactor-owning companies (Consolidate Edison Company of New York; GPU Nuclear, New Jersey; Genoa FuelTech, Wisconsin; Florida Power & Light; Indiana-Michigan Power, also known as American Electric Power; Xcel, Minnesota; Southern California Edison; and Southern Nuclear Operating Company, Alabama). Private Fuel Storage has applied for a federal license to run the facility.

Private Fuel Storage is impatient about Yucca Mountain.

"There are nuclear plants that will run out of on-site storage before Yucca Mountain could open. Those plants are faced with the difficult decision to shut down their reactors prematurely, severely limiting their ability to meet the electricity needs of their customers," noted the consortium.

The Nuclear Regulatory Commission is considering granting a license for the facility. A Final Environmental Impact Statement released by the NRC at the beginning of the year "concluded environmental impacts would be small or small-to-moderate and that the proposed Private Fuel Storage facility is the best alternative of those considered," according to the company.

It appears that no matter what happens with the Senate vote to override the State of Nevada's Yucca Mountain veto, the potential for a far less protected nuclear waste dump in the so-aptly named Skull Valley will remain.

J.A. Savage is a senior correspondent for California Energy Markets newsletter.

Indoor Pot Farms Tax Power Grid

A hundred females ripe for sex languish impatiently in a brightly-lit room waiting for a male, any male, to filter through that door and satisfy their needs. If only a male would come. They never do.

Such are the exasperated lives of indoor-grown marijuana plants. The only commercially useful plants are females, so the males are aborted, before they can impregnate females with their pollen. As they mature, these frustrated ladies still produce an enticing perfume, hoping to attract the male pollen -- the chemical THC (tetrahydrocannabinol), quite buzz-inducing and quite illegal, which is why the lusty lasses must be hidden indoors.

Unlike their wilder outdoor sisters, these females, kept on the vegetable equivalent of a tanning bed, use up an inordinate amount of electrical energy. Energy that could otherwise be provided by the most renewable power available: the sun.

In an era when outdoor pot is a pariah -- the target of multi-million-dollar eradication programs -- indoor growing operations have flourished, creating an electricity-sucking enterprise locked away in barns and closets and backrooms. And this has happened at a time when the nation's electric grid has trouble keeping the juice on for folks who don't have the solar alternative, from big factories to the computer power needed to write this story. Marijuana's move indoors is one more factor stressing out the electric system.

So far this year, the Drug Enforcement Agency has seized 80,000 indoor-grown plants, busting 1,000 "operations," according to a DEA source. Doing the math at 20 plants per light running 16 hours a day, leads to the monthly consumption of 2 million kilowatt hours -- about the hourly output of a very large power plant. And that's only what the federal government has discovered.

Grow lights suck 1,100 watts apiece out of the system. Compare that with your average 60-watt reading bulb. An average residential consumption is 500 kilowatt hours a month, according to Pacific Gas & Electric. A 10-lamp operation would consume over 3,000-kilowatt hours a month running a minimum of 12 hours a day. Bob Kinosian, analyst with the California's state-run consumer organization, Office of Ratepayer Advocates, estimates the lamps run more like 16 hours a day. A 60-lamp operation running 16 hours a day would suck up a stupendous 30,000 kilowatt-hours in a month. And you think your electric bills are high? Still, the operations can produce at least two or three pounds per light, according to Kinosian -- more than enough to pay the utility.

The leading states for indoor growing operations, according to the DEA, are California, Florida, Oregon and Wisconsin. And, officers are finding more and more indoor grows every year, leading to the assumption that marijuana producers and aficionados are forgoing free-range pot grown from renewable solar power for the safer buzz of "kept" sinsemillia. Of all the marijuana seized in 1997, only 6 percent was from indoor grows. That went up to 16 percent in 1999, according to the DEA.

High electricity use isn't the only environmental problem associated with indoor marijuana growing. In the fabled "emerald triangle" in Northwestern California, long-time outdoor growers now fearful of well-funded government raids on gardens have also moved inside. But, in the rural triangle (Humboldt, Mendocino and Trinity counties) many folks interested in the trade are "off-grid." They don't have a hook up to the local utility and don't want one.

So, instead of hooking up to polluting power plants they go to the local hardware store and buy a generator or three in order to fuel the voracious grow lights. Unfortunately for the environment, generators run on foul-smelling, air- and water-polluting diesel fuel.

Wayne Hanson, Humboldt County sergeant in charge of the drug enforcement unit, swears that diesel-fired generators fuel almost all the indoor grows he trips over on his way to busting the folks still growing outdoors. He mentioned that in one case, in trying to apprehend an outdoor grower suspect who fled into the woods on foot, he knocked on three doors of the suspect's remote neighbors. All had indoor grow operations. The cops declined running after the moving suspect, instead busting the homebodies with grow lights.

"Diesel fuel is dumped on the ground all the time. Seventy-five percent of the time [that I bust growers] I have to call the Environmental Health Department and Fish & Game to respond to diesel spills," Hanson explained of the fuel's hazards. Any spills or dumping can get into the growers' and their neighbors' legitimate gardens and drinking water, as remote households use the nearest creek or spring for daily needs. In addition, there's the potential for fish kill.

While in remote areas, diesel generators also add to air emissions and noise pollution. Air pollution is roundly ignored. Growers tend to try to muffle the sound of generators, though, with hay bales and the like to lessen suspicion.

The use of generators is winked at in the off-grid hills. Some actually are used to fuel televisions and refrigeration, but there's also a brisk business in delivering fuel up gated dirt roads with a handful of dollars tipped to the delivery driver to keep quiet about the generators' whereabouts.

This energy consumption, resultant pollution and pressure on the grid seems rather absurd given the last few years of state and local votes favoring some form of legalization. In the most recent election, for instance, California, Colorado, Nevada, Oregon, and Utah passed measures to approve limited growing or reduce penalties for marijuana possession.

"It's the insanity of prohibition. Every citizen is subsidizing an expanding electric grid. It's completely unnecessary when it could all be fueled by the sun," said one grower source who, understandably, asked to remain anonymous.

J.A. Savage is associate editor of California Energy Markets.

Power Hungry

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.

Diablo Demise

In the next six months, a nexus of economic forces will surface and, this time -- really -- Diablo Canyon will be shut down if economics finally have anything to do with it. This is not dreaming. Despite decades of Pacific Gas & Electric's ability to side-step economic reality, that reality is finally coming to roost in its corporate accountants' ledgers. And, it all has to do with hydroelectric dams. "We remain committed to make sure the plant will be competitive and safely operated for the long term," maintains PG&E spokesperson Jeff Lewis. But, he added -- and here's the catch: "Diablo is going to have to stand on its own two feet."A bit of history: Bonnie Raitt used to have more problems than successes. But, no matter how tough her life has been, she's always had a soft spot for encouraging anti-nuclear attitudes. Two decades ago, she serenaded thousands on the beach adjacent to the Diablo Canyon nuclear plant as human fodder demonstrated their way into a well-orchestrated cat-and-mouse game with the cops.As Raitt's bluesy guitar wafted up toward the still-unfinished plant, the demonstrators that were caught were handcuffed and put on buses and sent the hell out of San Luis Obispo. The handcuffs lasted about two minutes and as the buses of perpetrators left Pacific Gas & Electric property, everyone waived to the musicians.Diablo was not only installing half of its reactor backwards due to a little blueprint oversight, it promised 30 years of accumulated plutonium waste. Any fool could see that the safety problems alone should keep it from being fired up. At least, that's what all the demonstrations were about.Those were righteous days when public safety was supposed to get respect on its own merits. It was before junk bonds, stock options and day trading. "Economics" meant keeping your VW running and having enough cash for stash. Now, most teenagers know more about corporate financing than most anti-nuke adults did in 1980. Not going anywhere but jail, nuclear foes changed their tactics. After cramming to learn about finance, they thought that for sure it would be economics that would shut down the Diablo. The plant was way way over budget and debt kept piling on for safety and decommissioning costs. Alas, Diablo went on line anyway.Fast forward to 1996 when California became the first state to deregulate the electric industry. Environmentalists thought excess cost was sure -- this time, again -- to sink the plants. While most consumer advocates hate deregulation because they believe it leaves residential customers holding the bag for big business deals, they did celebrate a small victory -- Diablo Canyon would finally have to make economic sense. In other words, Wall Street would demand Diablo and San Onofre Nuclear Generating Station (near San Diego) shut down. There would be no economic justification to keep the nukes running. It appeared to be sweet victory for environmentalists.One glitch: As deregulation legislation was being worked out, PG&E, and Southern California Edison, with its San Onofre Nuclear Generating Station nuke, were able to keep nuclear subsidies for four or more years during a transition to the free electric market. Much of the deals made on deregulation legislation were made in the wee hours of the morning in the state Capitol at the behest of the state Senate Energy, Utilities & Communications Committee. The only interests who managed to stay up that late fed on coffee and M&Ms at were the ones getting real salaries -- not activist's pay -- and bonuses. Environmental and small-consumer advocates were whipped by the sheer staying power of utilities and other big-business groups.With environmental and residential consumer interests out for the count, PG&E was able to craft a few deals, including the one on Diablo subsidies.The deal made was that subsidies were supposed to last until 2002 instead of throwing Diablo on the market immediately. PG&E expected to use that breathing room to lower the cost of running Diablo. And, indeed it has, just not enough to make it competitive at the moment. The utility also hoped the market price of power would remain high enough after four years to cover whatever Diablo requires to keep in the business.Thus, even after the focus turned to economics and the plant clearly did not meet anybody's idea of an efficient power producer, nuclear foes still lost. In legislation, called AB 1890, PG&E was able to lobby for continued subsidies from electric customers to keep the plant going. For those taking notes, the subsidy is called ICIP -- Incremental Cost Incentive Price. Prior to deregulation, ratepayers had already been paying the ICIP, but in order for PG&E to trade favors at the Legislature to keep the subsidies when all other power -- both fossil and renewables -- had to be turned over to market rates, the utility agreed to trade the forever subsidies in return for the four-year sunset clause.PG&E did not count on that four years being up quite so soon.For Diablo Canyon, the ICIP subsidy is pegged at $0.0337 per KWh this year and up to $0.0349/KWh in 2001 while the market price of energy through the Power Exchange averages $0.026/KWh. Basically, then, Diablo power costs one-third more than the average power from every other source including windmills, solar, geothermal and natural gas-fired plants.To environmentalists' economic rescue: PG&E's dams. PG&E has 68 hydroelectric facilities including 174 dams and water control devices, as well as 138,000 acres of lovely forested watershed land adjoining those facilities. With electric industry deregulation, PG&E wants to get out of the electric generation business. It has already sold off all, except two, of its fossil-fueled power plants. The two left are Humboldt Units 1 and 2, located right next to the long-closed Humboldt Bay nuclear plant. PG&E didn't even put them on the market because their proximity to the nuclear facility with its spent fuel still on-site and next to three earthquake faults would cause any offering to be snubbed by investors.After PG&E's fossil fuel plants and geothermal plants in Northern California were out of the picture, next on its "for sale" list is dams. But, when deregulation was enacted by the Legislature and the four-year subsidy continued, no one ever thought that the sold-off plants would be worth so much on the market. If Pacific Gas & Electric's dams get sold at anywhere near the $6 billion they're thought to be worth at the moment -- State Senator Steve Peace (D-San Diego) opines that they are worth up to $7 billion -- the California Public Utilities Commission intends to cut off Diablo's subsidies immediately and the utility will have to act like any other electricity entrepreneur. PG&E will still have a monopoly on the poles and wires to your house, but it will have to compete with other providers like Commonwealth Energy and Edison Source for your actual electric commodity -- the juice only -- needs.With the unexpected $6 billion windfall, most observers think that PG&E's dams will be valued or sold by mid-2000, a couple years ahead of schedule. And when that happens, Diablo becomes a big liability.PG&E spokesperson Lewis says that the costs to run the plant are below the subsidized price, but is extremely uncomfortable discussing the matter (think hemorrhoid commercials) and steadfastly refuses to say how much below the subsidized price Diablo can run, or whether Diablo can even begin to meet the average retail price of electricity from other sources. Assuming the hydroelectric plants have price tag attached to them by next summer, PG&E shareholders will be facing a big decision. That one penny difference in market price for electricity versus what it costs for Diablo to operate translates into about $160 million per year in lost revenues, according to California Public Utilities Commission Office of Ratepayer Advocates analyst Bob Kinosian. Shareholders will have to determine whether to keep pouring $160 million a year into the plant in the hope that it will turn around a make a profit one day. Or, shareholders can cut their losses.If the plant's operating costs are that high and PG&E continues to run the plant, "Then they flunk the IQ test," said Frank Wolak, Stanford economics professor and member of a state committee that watches the deregulated electric industry for any wrongful activities. A bevy of electric industry analysts were apparently caught off-guard by this new risk. Electric industry analysts for the usual suspects: Standard & Poor's, Moody's, Fitch, Merrill Lynch and Goldman Sachs refused to comment on the possibility of Diablo's early shut down due to shareholder risk. Still, PG&E has one small chance to wiggle out of its dilemma and keep the subsidies for another couple years.After lengthy hearings, the California Public Utilities Commission is about to vote on a proposal by one of its judges that would seal the subsidy cut-off date, making it simultaneous with the end of the rate freeze. After months of gathering data in hearings, it appears to be a solid decision with plenty of legal back up. This decision is needed because no one thought the end of the rate freeze would occur before 2002, and while the law in AB 1890 appears clear, there is some small margin of doubt.Needless to say, PG&E is rather unhappy about this prospect. "[It's] volatile and by definition unworkable," noted PG&E attorney Chris Warner last week ((editors, Sept. 21)). He also called the idea of ending nuclear subsidies "tortured and unlawful."PG&E can, and will, lobby the hell out of commissioners to get its way between now and when the commission is supposed to rule on the matter -- scheduled for early October, but probably not until next month. In the last decade, utilities have almost always gotten their way at the commissioners' desks, but this is the first time in ages that two commissioners have been appointed by a Democratic governor. So, betting on the old patterns is like betting that Diablo can make it without subsidies in a deregulated market.J.A. Savage is associate editor of the independent weekly trade publication, California Energy MarketsSIDEBAR Just Like Alimony, Stranded Assets are a Long-Term Commitment -- Until the New MarriageJust so you know, California's rate freeze kept electric bills at June, 1996 rates -- about 10 percent higher than what a PG&E would be charging now. That excess price is being spent to buy off investments in "stranded assets." Think of stranded assets like you would if you made a bad decision. A bad haircut -- you waste $10 to $40; a lemon of a car -- that can be in the multi-thousands of bucks; a failed marriage with alimony and child support -- well, you get the idea. You make a poor decision and your bank account suffers. That extra 10 percent for stranded assets is supposed to cover Pacific Gas & Electric's management decisions, and a few of the California Public Utilities Commission's requirements. Stranded asset pay-off is a little like a "get out of jail free" card in the Monopoly deck. PG&E was able to rack up the investments, have ratepayers pay off a return on those investments to shareholders over the years, and still get paid more in the stranded asset deal. Unlike your bank account, PG&E's isn't really suffering from its own mistakes.But, as soon as PG&E's hydroelectric plants have a price tag attached, it's almost certain all the stranded assets will be paid off. It's back to a roll of the dice for shareholders and their belief in management's ability to make good decisions. If that particular Monopoly board has a stop for a utility with Diablo Canyon sitting on it, landing there would cost a bunch of paper money, indeed.--J.A. S

Ripple Effect

Sitting in the Timberhouse dining room in Chester, California, two retirees discuss the day's usual lack of catch. They're spending their waning years in RVs by the edge of sparkling Lake Almanor, most of the time with a fishing pole in hand. What they know is the condition of the lake rarely fluctuates. What they don't know is that it's about to. They don't care. "I'll be dead before anything changes," says the 85-year-old.Unless he plans on a funeral next year, he's wrong.Lake Almanor is created by one of 13 Pacific Gas & Electric hydroelectric facilities on the Feather River. Once the initial damage to the watershed was done, the utility -- the largest in the nation -- has operated them for a total of 68 facilities in vast Northern and Central California quietly and more-or-less benignly for nearly a century.Despite its profitability, PG&E doesn't want to be in the hydro business anymore.The utility has a plan to transfer its dams to a sister company -- a move that could raise and lower levels on Lake Almanor in an instant, leaving retirees' RVs high and dry or sopping wet, as well as take drinking water out of state regulation, manipulate the price of electricity and put watersheds in the hands of timber companies. And it's not just in California; another PG&E affiliate is buying up dams in New England too. In California, the yet-to-be created unregulated affiliate is to be called PG&E Hydro. In Vermont, it's PG&E Generating.If the plan goes through, the two PG&E affiliates would be the largest owners of electric generation in the nation.The dams in California control most of the arid state's rivers. And, it's a state where water wars historically shaped development, and continue to do so. In California, water can be far more precious than gold. It's a conduit for real estate development. It subsidizes agribusiness. It controls what's left of fisheries. And, in the increasingly deregulated energy industry, water can control the price of another precious commodity -- electricity. On the East Coast, PG&E Generating bought six hydroelectric facilities from New England Power in New Hampshire and Vermont two years ago. The sale of those dams, primarily on the Connecticut River, are being appealed by the North East Center for Social Issue Studies based in Brattleboro, Vermont.Here's the deal: PG&E (the utility) wants out of the electric generation business. California is the first state to wholly deregulate electricity generation and the utility wants to focus on the still-monopolized distribution part of the scene while its more risky, and potentially more profitable, unregulated sister companies focus on the competitive market.The utility wants to transfer ownership of its 68 hydroelectric facilities to sister company PG&E Hydro, which would be under the same corporate umbrella as PG&E. But, it would not be regulated by the California Public Utilities Commission. PG&E's facilities include 174 water control dams on 30 major rivers and streams. In addition, PG&E plans to transfer another 136,000 acres of watershed land to PG&E Hydro. The land could then be used without regulation, or it could be sold to other companies, probably timber firms for logging.After months of resisting putting a price tag on the dams, PG&E recently decided they're worth $3.3 billion. Not chump change, but nowhere near the price that State Senator Steve Peace (D-San Diego) thinks they're worth -- up to $7 billion. Dave Kaplan, PG&E manager of investor relations, says that at the $3.3 billion price, the money would be spent to bring down electric rates from 10 percent to 40 percent.But, environmental considerations come first for those involved -- other than PG&E, that is. And, as usual, environmental problems boil down to money. "We're now looking at rivers as profit centers," Hervey Scudder, president of the North East Center for Social Issue Studies in Brattleboro, Vermont, says."In a deregulated electric market, there is pressure not to do things that have an environmental benefit," California State Senator Debra Bowen (D-Redondo Beach), explains. Bowen, the chair of the energy, Utilities & Communications Committee, is attempting to put into law some restrictions for the environment, fish and water consumption on the use of the dams, no matter who owns them.As a part of PG&E's hydroelectric plan, the utility promises to maintain its current level of "environmental stewardship." PG&E vice president of rates and accounting services, Tom Bottorff, says that as long as the "dams stay in our corporate family we would be committed to the long tradition of honoring environmental and water rights." But, PG&E only promises to keep the dams for five years, and may sell them off sooner if they become "uneconomic," according to the company.Michael Jackson, attorney for the Regional Council of Rural Counties in Northeastern California, scoffs at PG&E's version of environmental stewardship. He invokes the much-dammed Feather River in his own back yard. "It's silted in both dams and diversions. The fishing's horrible. Facilities have failed and aren't repaired."So, instead of environmentalists on the scene, anglers are the ones attempting to ride to rescue. In response to PG&E's $3.3 billion price tag, California Assembly Speaker Pro Tem Fred Keeley joined up with the Pacific Coast Federation of Fishermen's Associations. The fisher folks are the radicals here. They want some of the dams taken down. The lack of environmental voices so far is at least partially due to utilities funding environmental groups, according to Vermont's Scudder. "Nonprofit organizations are in an awkward place. Utilities have learned that for very little money they can fertilize nonprofits. Everybody starts making payments on cars and sending their kids to college. Then they're trapped. Environmentalists are not about to get on board [against dam sales] when it could jeopardize their funding." Scudder mentioned two East Coast environmental organizations with that problem -- the Conservation Law Foundation and American Rivers. The Conservation Law Foundation was the subject of a Wall Street Journal investigation earlier this year that found similar conflicting interests.Environmental concerns are one object. Electric prices are a close second. If the 4,000 megawatts of electricity produced by running California's rivers through PG&E's hydroelectric facilities -- 5,000 megawatts if one includes PG&E sales through irrigation districts -- is added to PG&E current affiliate's 7300 megawatts, PG&E's unregulated affiliates would become one of, if not the largest generators in the nation. In comparison, PG&E's largest nuclear plant, Diablo Canyon, produces 2100 megawatts.In Vermont, while there's no deregulation yet, there's a plan being floated by the state government to spend over $1 billion to bail out utility stranded assets. That includes both nuclear and hydro plants.Many other states are in the process of deciding if, and if so, how much, they have to pay off their utilities for their own stranded assets.If PG&E's plan to transfer the dams is approved, PG&E Hydro would likely sell the electricity into the competitive electric market. That could bring down electric prices for consumers, but critics, like Lon House, consultant for the Association of California Water Agencies, fear, however, PG&E Hydro could "dictate electric prices."Indeed, an owner that has both hydroelectric and other generation, as PG&E affiliates would, is "potentially disruptive" to a competitive electric market. A hydro owner could "earn higher prices for all the generating capacity it owns" by keeping cheap hydroelectricity off the market at times of high demand, a committee of the California Independent System Operator -- the quasi-public agency responsible for reliable electricity, notes.Hydroelectricity is a bargain, but complications -- including market manipulation--could make hydroelectricity relatively expensive. Now, hydro is cheap because rain, the fuel, is free. Most other sources of electric generation in California run on natural gas, a finite fuel with a price tag. No matter what method picked for running most of the state's hydroelectric plants, or even tearing then down to return rivers to more pristine habitat, the reliable old utility that quietly took care of the dams for most of this century is forever changed. It will be a mad scramble over the next few months to see who comes up with the prize of California's version of liquid gold and who calls the shots when Northeast states enter a deregulated environment.J.A. Savage is associate editor of California Energy Markets, an independent weekly covering politics, regulation and the business side of the energy industry.

Electric Deregulation

Big corporations anxiously anticipated telephone deregulation to lower the cost of talking to clients in faraway places. Business flyers couldn't wait for airline deregulation to lower the cost of jetting to all those important meetings. Now, businesses that consume lots of energy can't wait for electric industry deregulation.But, just like the other industries where vacationers pay more than Citibank executives heading for Hong Kong and phoning your mom costs more than phoning clients for IBM, individual electric ratepayers will be on the hook to subsidize businesses that will benefit from electric deregulation. Individual ratepayers will also subsidize profits for electric utility shareholders.States are deregulating electric utilities one-by-one at the behest of big consumers from steel manufacturers to department store chains. Congress is expected to fall in line in the next year offering national legislation to allow electric competition.California will be the first to deregulate on a massive scale beginning January 1998. Massachusetts is a nose behind. Other states like Texas appear ready to commit but are watching California closely as the state with 10 million electric customers takes the plunge. Companies that use scads of electricity lobbied California regulators five years ago to get them to do something about the high cost of electricity. California may be the golden state, but the price is high -- electricity costs about 50 percent more than the national average. At the time, the state was in economic doldrums in general due to the evaporating defense industry. Business lobbyists threatened regulators with relocating to other, cheaper states.The all-Republican California Public Utilities Commission has a soft spot for big business' concern over the price of electricity. Adopting the role of state economic booster, as well as taking the opportunity to make history, commissioners offered to deregulate. At first, this move had the nicely protected electric utility monopolies wailing. "No. Please. Don't deregulate us!" they cried. For the last 62 years under mandatory federal regulation "to eliminate the evils" of unruly, and often fraudulent, electric providers, utilities got comfortable working in a cost-plus environment. Unlike every other business entity which has to figure out how to make something or offer a service at a price people are willing to pay, utilities got to offer whatever they damned well felt like offering and consumers had to pay simply because utilities are regulated. It started out on a small scale -- utilities built a few dams, a few small coal plants and oil-fired turbines. But it escalated. The coal plants grew into excuses to strip mine. Then, nuclear power came along. All this arrived with not only a price tag for construction, but a guaranteed stream of interest payments to utility shareholders. If subject to competition, these utilities will suddenly have to face the capitalist world of no guarantees. Their decisions will not automatically be supported by ratepayers. Competition scares the pinstripes off of utility executives.But as deregulation unfolded, utility management figured out how to tip the scales, change the whole paradigm and make deregulation work in their favor -- and small ratepayers will be stuck with the bill. To counter big business' calls for cheaper electricity, the concept of "stranded assets" was hatched.Remember that phrase --"stranded assets." It is code for "utility bailout." Assuming deregulation sweeps the other 48 states, the stranded asset bailout rivals that of the savings and loan bailout. Utility management invested in unusually expensive and often unnecessary facilities in order to provide electricity. It's resulted in colossal polluting machines like coal plants, gravity-defying engineering like pumped-storage plants, and the all-time money pit and scary technology of nuclear power. All management had to do was convince regulators -- usually technically naive and in the job for political, pension or self-aggrandizing reasons -- that the projects were sound. Regulators' approval guaranteed utilities that ratepayers would pay for building the facilities, as well as decades worth of interest payments to be shipped onto utility shareholders.One of the most egregious incidences -- and one that goosed California's electric rates far beyond the norm -- is the Diablo Canyon nuclear plant. The plant ended up costing $5.5 billion to build. But after being in service for 10 years, ratepayers have paid over $25 billion for the plant to Pacific Gas & Electric shareholders. That's not enough for PG&E. The utility claims that ratepayers still have to pay more to its shareholders, that the plant is a "stranded asset."A stranded asset is anything that a utility invested in that cost more than a competitor can come up with for the same job. For instance, power from Diablo Canyon cost in the vicinity of $0.12 per kilowatt hour (kWh) due to the high cost of construction and interest payments. Electricity from a natural gas-fired turbine only costs about $0.025 per kWh; from a windmill, about $0.05 per kWh.A utility competitor, say someone with a windmill, then, could offer electricity to consumers at half the price of electricity from the utility-owned nuke. Utilities say this is unfair. They claim that they only invested in the nuke in the first place to provide public service. They say that throwing them into a competitive market would wipe them out. They're probably right. They want ratepayers to pay off their stranded assets in order for them to be competitive.In California, regulators ordered ratepayers to pay off all utility stranded assets, about $30 billion worth. Nationwide, it's estimated that stranded assets will cost about $200 billion -- the bailout would cost about $2,200 per household, according to energy economist Bill Marcus. And that's just the principal, not the interest payments. But utilities made a deal in California. In return for paying off their outstanding debt, they accepted a lower interest rate on it and put it in a shorter time frame. So, instead of paying 12 percent interest for another 20 years on Diablo Canyon, ratepayers will pay off the plant in four years at 7.35 percent. Facing overwhelming opposition from legislators and regulators, consumer advocates reluctantly went along with the deal. They originally wanted utilities to cop to the fact they made bad investments and write off the debt, just like real corporations do when management makes bad investments.Even with the deal, California's bailout will represent 40 percent of small ratepayers' bills for the next four years, reducing to10 percent or so until 2006. Utilities around the nation want similar bailouts. They claim they have contracts with regulators and that asset write-offs or write-downs constitutes a breach of contract. They have claimed -- and legal scholars think correctly claimed -- that if ratepayers do not bail them out they can file federal lawsuits to get the money. This tactic was pioneered by the Wise Use Movement. The Wise Users say that any time they cannot use their property as they see fit --like building a shopping mall that would wipe out an endangered butterfly --they can file suit under the "takings" clause of the Fifth Amendment. Utilities loudly claim that no bailout equals a "takings" and states are loath to expend resources on that court fight. Electric deregulation appears to be an unstoppable force. But consumer advocates maintain it does not have to be the bailout in every state that it's come to in California.J.A. Savage is an editor at California Energy Markets

BRAND NEW STORIES