Many people will no doubt be asking, why did they tinker with it? Why didn't they just leave the electric utility infrastructre in California the way it was? Why deregulate in the first place?

Well, why?

Because of unscrupulous people.

One of the most assinine lies voters and "consumers" have been asked to swallow in recent years is the panacea of privatization. Everything is better, the conservatives opine, when privatized (and/or, deregulated). Medical care, education, transportation services, the internet and of course, public utilities. It fosters "competition" and that means innovation and lower prices, right?


What it generally means is that a politician and a private citizen enter into a kind of scam. A public resource or facility, which has been developed and maintained with taxpayer dollars, looks good to this private citizen. Colluding with said politician, they negotiate for it to be "privatized." Sometimes there is a sham auction. Often not even this fig leaf is opted for, and the private citizen simply "buys" or is even "awarded" what they want. A quick survey of news articles about these ownership transfers reveals a common trend.

These private citizens are getting some incredible deals.

Maybe they called up that guy with the question marks all over his suit.

In America we have some wonderful old reactionaries running around defending privatization and bashing the alternatives as communism/socialism. The one thing they all have in common is a complete lack of actual working knowledge of how privatization of a given entity actually works, at the nuts and bolts level.

You must admit it's been nagging you, hasn't it? I mean, Ford and Chevrolet can compete - we know how that works. You can go to different dealerships and buy one kind of car or the other. But how, exactly, can electric utilities compete? You don't have redundant power lines coming into your home, redundant outlets, or redundant power plants... Heaven forbid, the expense.

Though power plants are the most plausible of all of these alternatives; that's what everyone who'se thought about this at all must think is the real heart of the competition scheme for electrical utilities, right? You can have a bunch of different power plants, buying oil and selling electrity to the grid, right? But there is the problem of distribution.

Why, after all, can't New York loan California a little of it's juice? With Giullianni on the case, we must have enough power for three cities by now, right?

Oh, what's that? Distribution of electricity in volume is nearly impossible over long distances? Up to 80% of generated power is wasted in the distribution network? Really?

No, let me tell you how "competition" really works in the power generation business.

If you build power plants, the power supply goes up, and your product is worth less. Hence, your profits go down.

If you do not build power plants, and/or take some of your plants off line, the power supply goes down, and then your product is worth more. Supply and demand! Whopee! Time to raise the rates!

This is exactly what's happened in New York, as well as in the half-dozen or so other major metropolitan areas where this venomous scheme has been foisted on the taxpaying public. Step one, privatize and deregulate the utilities. Step two... surprise! Your rates just went up! And... hey! It's dark in here!

The only difference is that in California, the power distributors were not allowed to pass on the rate hikes to consumer. Causing the slight backup of money to the privateers. No matter - they'll be paid with public debt instead.

Why? Because "supply" and "demand" capitalist economics and electrical utilities are the proverbial square peg and round hole. You have to have your brains leaking out your ears to think this one would work. Surprise, capitalism is not a panacea.

And if your attention span is long enough, you will remember from the beginning of this writeup that the very power plants that are now price gouging you so hard that in another hour and a half, you won't have the juice to even surf this site, the very power plants that over the past three months have suddenly had the wherewithal to raise their rates almost 100 fold... were constructed, in many cases, with your tax money, or a government's gaurantee of debt... and sold to a political crony for the express purpose of perpetrating this very situation.

The only possible way the "private" power generation companies can fail to get rich is by doing what they're supposed to... which is, provide ample, cheap, environmentally sound generating capacity. If you want to make money, on the other hand, the opposite is true; it's in the private utility's best interests to use the cheapest, dirtiest power generating techniques available, to encourage as much waste as possible, and to cultivate their most profitable volume buyers at the expense of their least profitable low and middle income customers.

The other writeup here makes this sound almost like a little "accident" by California's political crew. There is nothing accidental about privatization of public utilties. It's premeditated systematic theft of the public trust.

It has come to my attention that some people (i.e. the CEO of National Grid USA) have been going around saying that the power shortage is due to California's (and I quote) "absurdly restrictive environmental controls" preventing the building of new power plants.

I hope I never meet this person face to face. He should hope so too. Despite California's "absurd restrictions" (The California Environmental Quality Act - which I doubt he's read - is hardly what I'd call absurd) approximately 6,300 megawatts worth of new facilities (or 13% of the state's total generating capacity) have received approval. Regulation... ironically... is what they lack... or they would be online already.

I quote the New York Times: "But the real reason for the energy shortfall is that no new plants were built in the 1990's because prices were low, supplies were plentiful and producers wanted to wait until they better understood the new era of deregulation."

Hey, do you think they understand it better now?

How do these people sleep at night?

Oh my. It gets better. There are people going around claiming that increases in oil and natural gas prices have caused the stretch.

Oh. My. God.

Perhaps if the privately held California power generators would volunteer to raise their prices only to cover the exact increase in fuel oil costs...?

No? Not interested in doing that, for some reason?

Funny; that's what would have happened before, under a regulated electic utility. The generators would simply make a rate case (which, if validateable, would be approved) and pass along the increased fuel prices directly in your electric bill. Of course, that would leave little room for "exaggeration" - but then, that's what this entire charade is all about.

I apologize to the crowd for capn haggis's smashing ignorance of the new "utility infrastructure" in California.

You see, haggis:

  1. The distributors of electricity have had their prices fixed. This was an afterthought in the process - a "concession" by the authors of this boondoggle to grease it's slide through the sometimes unpredictable state legislature. It was an easy giveaway to the consumer lobby, because it was meaningless. Everyone now knows what those who architected this little disaster knew all along: the distributors buy their power from the generators, who have no price controls at all.
  2. Those independent, "privatized" generators of electricity promptly stopped all new construction. Then, we find ourselves with a significant portion of the existing generating capacity "down for maintenance." Whoops! A "shortage". Then they turned the dial marked "price gouge" all the way into the red. This is when it dawns on you that there's no difference between your rates going up and your taxes increasing (or services decreasing) to pay for an electric utility bailout. Except that the latter is even more expensive than the former.

    Now, don't you feel silly? Go sit in the corner.

This just in. On Wednesday, January 24, 2001, major power companies made a public statement, informing people that watching the Super Bowl alone could cause a complete power outage that could possibly last a few hours.

The Super Bowl is the most watched TV event each year. If the astounding number of people who tuned in last year tune in again this year, all the TV's will suck away the last of California's power.

So they're telling the public to plan parties and watch the Super Bowl this year in groups to prevent serious outages.

The power company and football. Bringing people together... or else.

This power shortage was not a result of deregulation.

It is a result of the failure to deregulate.

Population and industry have been booming in California for decades.

No new power plants have been built there for more than 10 years, mostly because of the environmentally minded Californian population. NOT because of something the New York Times said. If the California power industry had it's way, it'd be selling _lots_ of power for a lower price. That's how businesses work.

That means we have a rising demand and a constant supply. Let's see, any economics majors in the house?

Prices hit the ceiling, and then keep going up. And yet the companies still go out of business. People are _still_ accusing them of blind greed, even when they run at a loss, all the way into the ground, and finally go bankrupt as several are about to.

Lesson? Any time and every time the government sticks it's nose in the economy, things turn sour to the extent the economy is fucked with. Think 1929. The California power industry has been fucked with for decades. They're paying that price now.

The “California Energy Crisis” has nothing to due with deregulation. I know this because deregulation never occurred in California. The two primary energy companies in California are forbidden to retail their product more than a certain a amount of money. The amount they pay wholesale for power sources exceeds the amount they can charge. This brings us to the wonderfully astute comment by Mr. Option:

Perhaps if the privately held California power generators would volunteer to raise their prices only to cover the exact increase in fuel oil costs...?

The reason they won't volunteer to do that is that it's become illegal to raise prices. They are prohibited by regulation from doing so.

So for anyone out there who can balance a checkbook: What happens when outlays exceed revenues? You loose money that's what. Which brings us to our second astute observation from Mr. Option:

"The only possible way the 'private' power generation companies can fail to get rich is by doing what they're supposed to... which is, provide ample, cheap, environmentally sound generating capacity."

So since private power generation companies are, in fact, failing miserably to get rich, they must be doing what they're supposed to do. Not only are they failing to get rich they're downright broke. Their bonds have, as of March 2001, now reached junk status, which is a very bad thing. Said bonds have been a staple of pensions in the region for decades, now they're worthless. Suppliers refuse to sell them any petroleum because the suppliers have no faith in the utilities to recompense them, and justifiably. The Feds might have to step in and bail them out, and we know exactly how bad that ends up. (Anyone remember the S&L bailout? That worked like a charm.)

It's even simpler than supply-and-demand. (Which is good since most politicians seam incapable of grasping that concept.) It's just revenue and cost. Spend more than you make, and you run out of money. That easy.

The Government of California has succeeded again in screwing things up like only governments can do. God save the people of California.
An open letter from California to the rest of the nation:

Dear (the rest of) America,

America has engaged in some finger wagging lately because California doesn't have enough electricity to meet its needs. The rest of the country (including George W. Bush's energy secretary Spencer Abraham, who wants Californians to suffer through blackouts as justification for drilling for oil in Alaska's Arctic National Wildlife Refuge) seems to be just fine with letting Californians dangle in the breeze without enough power to meet their needs. They laugh at Californians' frivolity.

Well, everybody, here's how it really is:

California ranks 48th in the nation in power consumed per person.

California grows more than half the nation's fruit, nuts and vegetables. We're keeping them. We need something to eat when the power goes out.

We grow 99 percent or more of the nation's almonds, artichokes, dates, figs, kiwifruit, olives, persimmons, pistachios, prunes, raisins and walnuts. Hope you won't miss them.

California is the nation's number one dairy state. We're keeping our dairy products. We'll need plenty of fresh ones since our refrigerators can't be relied upon. Got milk?

We Californians are going to keep all our high-tech software in state. Silicon Valley is ours, after all. Without enough electricity, which you're apparently keeping for yourselves, we just don't have enough software to spare.

We're keeping all our airplanes. California builds a good percentage of the commercial airliners available to fly you people to where you want to go. When yours wear out, you'd better hope Boeing's Washington plant can keep you supplied. There isn't enough electricity here to allow us to export any more planes than we need ourselves.

Oh, yeah, and if you want to make a long-distance call, remember where the satellite components and tracking systems come from. Maybe you could get back in the habit of writing letters. Want to see a movie this weekend? Come to California. We make them here. Since we'll now have to make them with our own electricity, we're keeping them. Even if we shot them somewhere else, the labs, printing facilities, editing facilities, and sound facilities are all here.

Want some nice domestic wine? We produce over 17 million gallons per year. We'll need all of it to drown our sorrows when we think about the fact that no matter how many California products we export to make the rest of America's lives better, America can't seem to help us out with a little electricity. You can no longer have any of our wine.

You all complain that we don't build enough power plants. Well, you don't grow enough food, write enough software, make enough movies, build enough airplanes, or make enough wine.

This is your last warning, America. Lighten (us) up before it's too late.


The Californians

This joke is being distributed anonymously.

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