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FYI in case you missed - Opinion piece in San Diego Union Tribune.
Peggy ---------------------- Forwarded by Peggy Mahoney/HOU/EES on 08/17/2000 01:29 PM --------------------------- kpope@enron.com on 08/17/2000 10:05:06 AM To: <meberts@enron.com<, <pmahoney@enron.com< cc: Subject: Industry News: Duplicity and demagoguery on electricity from kpope- fyi ------------------------------------------------------------------- E-mailed by: Dow Jones Interactive (R) Server Software Folder: Industry News ------------------------------------------------------------------- Headlines: Duplicity and demagoguery on electricity ------------------------------------------------------------------- OPINION Duplicity and demagoguery on electricity Richard Nemec Nemec is a Los Angeles-based writer who covers the energy industry. Aug. 15, 2000 San Diego Union-Tribune 1 7 Page B-9:7; B-11:1 (Copyright 2000) The current brouhaha surrounding San Diego <B<electricity</B< bills is a poignant reminder of just how politicized an issue can become under the rubric of fostering the public good. In this case, California's seven-year <B<electric</B< industry <B<deregulation</B< effort, with complete support and crafting from the Democratic-controlled state Legislature, is being made the whipping boy for the current price spikes. The truth is anything but. Nevertheless, facts have never stopped elected officials, politically appointed regulators or consumer advocates as they try to elbow one another out of the way to be seen by consumers as their patron saint. In the debate over this summer's high power bills it is the very folks who are screaming the loudest who have contributed the most to the "crisis." Among the culprits -- Sen. Steve Peace, D-El Cajon, the Legislature, Public Utilities Commission member Carl Wood, and San Diego Gas&Electric Co. -- each has contributed to the bills going through the roof. But having said that, it never has been, nor does it need to be, a crisis for the state or for San Diego County. California will survive the current electrical bumps and grinds, but it may not survive the political fallout. It is now clear that two Gov. Gray Davis appointees -- Wood and CPUC President Loretta Lynch -- want to re-regulate the electric industry as does Sen. Peace. SDG&E unfortunately was dumb enough to help establish the climate that has allowed them to demagogue the issue and escalate its importance way out of proportion. Start with a recent assault by Wood to declare that a "radical" deregulation policy driven by ideology rather than economic soundness has created a "crisis." The cornerstone of the problem, as Wood sees it, is that there haven't been any major power plants built in the state in more than a decade. (It is also true that when California's electric restructuring law was unanimously passed four years ago, there was an over-supply of generation capacity within the state.) Wood wants to turn that around by mandating utility-built power plants. Wood knows all too well that more than a dozen major generation plants are under construction or in the state's lethargic approval process right now. If, magically, they could all be built by next summer, California would be awash in electrons. They can't, but there is the prospect for getting ahead of the curve by the summer of 2003, if the state -- Gov. Davis, most specifically -- does something to accelerate the current siting approval process. Earlier this month, the governor set in motion work to streamline the siting process. Regulatory intervention (some call it re-regulation) is what Peace has had on his mind at least since winter when, at an energy discussion held in San Diego, he sounded the drumbeat for the government to try to correct what he perceives as failings in the market. At the same time, he and his colleagues in the Legislature for the past couple of years have stymied CPUC moves to step up the deregulation process for both natural gas and electricity. Most notably, Peace engineered a bipartisan rider in this year's budget bill that prevented the state's utilities from buying some of their power supplies outside the state-created power exchange. That move, and SDG&E's passive financial management, helped eliminate one means of lessening the current electric bill shock. There are further design flaws in California's restructured electricity market -- initiated by Peace to buffer San Diego from having the highest priced power in the state -- that have complicated the newly developing market, and for which politicians take no responsibility. Finally, there is SDG&E, which clings to its own self-proclaimed fiction that it is only an "energy delivery service" and holds no responsibility for what has happened to the 1.2 million households and businesses using the juice it delivers. In fact, however, the utility company could have taken some steps in the spring in terms of financial risk-management instruments offered through the California power exchange that would have lowered the price spike. It also could have been more aggressive in promoting conservation by customers. Subsequently, SDG&E has been tripping all over itself making emergency filings to the CPUC, seeking authorizations it could have aggressively pursued before the crisis. The regulators granted everything it asked for, finally, on Aug. 3. But SDG&E does have a generating role -- it still has a 20 percent interest in the San Onofre nuclear plant and a corporate affiliate operates a new power plant in Nevada. And, guess where that plant sold all of its power during the recent crunch in California? To Arizona -- that's where! Richard Nemec's e-mail address is: <a href="mailto:rnemec@mediaone.net"<rnemec@mediaone.net</a< SDU0023000408 To view all headlines in the folder Industry News, go to http://eeshou-dowj1/browsearticles.asp?folderid=1 To go to the front page of Dow Jones Interactive Intranet Toolkit Server Software, go to http://eeshou-dowj1/ ------------------------------------------------------------------- For assistance, contact Dow Jones Customer Service by e-mail at djip.itkhelp@dowjones.com or by phone at 800-369-7466. 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