March-June 2001

Could California’s Energy Crisis Cripple the Economy?

As benefits of deregulation remain elusive, consumers are left holding the bag.

When California’s legislature unanimously passed a bill to restructure its electricity industry five years ago, it wrote the recipe for a major meltdown. While Californians experience rolling blackouts, often with little or no forewarning, their electricity bills have jumped 10 to 80% and are left wondering who is to blame.

While wholesale prices were deregulated, retail prices were capped; as consumer demand increased while wholesale prices skyrocketed, California’s utility companies were left on the verge of bankruptcy. Washington and Oregon are crying foul as California scrambles to purchase power from their overstressed systems, including hydroelectric systems suffering from low winter rainfall.

California’s Governor Davis’ plan to purchase the state’s 32,000-mile network of transmission lines for $6 billion (twice their appraised value) from the power monopolies is being called a utilities bailout in disguise. By selling off the lines, the utilities would transfer responsibility for upgrades and maintenance to the state, leaving consumers to foot the bill whether through higher rates or higher taxes. California has already spent $2 billion in just two months to keep its lights on.

Citizens and consumer groups claim that power producers are manipulating prices while maintaining major profits. President Bush has called the crisis a state, not a federal, issue, but critics claim that he couldn’t be more wrong: the Energy Regulatory Commission has the authority to set cost-based rates on California power producers. Many have decried the Administration’s call for the construction of new power plants, citing the fact that the true problem is the antiquated network of transmission lines, which was built piecemeal rather than as a superhighway, suffering from bottlenecks and local weaknesses.

The crisis felt most keenly in California is a national issue:

• California’s power crisis could cripple the state economy.
  
  
• Power plants, transmission lines, and natural gas pipelines are stretched to their limit in many states. Consumers and businesses throughout the nation are facing heating bills two or three times higher than those of last winter.
  
  
• Energy consumption for the ten western states has been growing over twice as fast as California; the national average increased by 22% from 1990-99, double California’s figure.
  
  
• The impending restructuring of the electricity industry caused the utility companies to slash investment in energy-efficiency programs by nearly 50% since 1993, while the energy savings such programs could have provided are now exacerbating the capacity crunch.

Is California’s energy crisis simply a case of corporate greed run amuck? Could other states face similar crises? How can consumers conserve energy and save money? What does this experience tell us about electricity generation and the need for independent, renewable sources of energy?

Between March and June 2001, MMP conducted a public education campaign on these issues. In all, we scheduled 111 radio interviews in 19 states. Of these, 34 were regionally, nationally or globally syndicated. Some 31 authorities were interviewed on topics related to the California energy crisis and its potential effects on the rest of the nation.

Guest Speakers by Topic:

Medea Benjamin, Founding Director, Global Exchange, United for Peace

John Cavanagh, Director, Institute for Policy Studies

Hal Harvey, Executive Director, The Energy Foundation

Martin Kushler, Co-Director, Utilities Program, American Council for an Energy Efficient Economy

David Morris, Vice President, Institute for Local Self-Reliance

David Nemtzow, President, Alliance to Save Energy

Karl Rabago, Managing Director, Rocky Mountain Institute

Harvey Wasserman, Senior Advisor, Nuclear Information and Resource Service and Greenpeace, Senior Editor, www.freepress.org, The Last Energy War

Anna Aurilio, Legislative Director, U.S. Public Interest Research Group

Tom Collins, Manager of Communications, New York State Energy, Research and Development Authority

David Doniger, Policy Director - Climate Center, Natural Resources Defense Council

Seth Dunn, Research Associate, Worldwatch Institute

David Eisenberg, Director , Development Center for Appropriate Technology

Matt Freedman, Staff Attorney, The Utility Reform Network

Dave Hamilton, Policy Director, Alliance to Save Energy

Mark Hopkins, Vice President, Alliance to Save Energy

Kalee Kreider, Director of Global Warming campaign, National Environment Trust

Daniel Lashof, Senior Scientist, Natural Resources Defense Council

Frank Loy

Bill Magavern, Senior Legislative Representative, Sierra Club California

Arjun Makhijani, President, Institute for Energy & Environmental Research

Athan Manuel, Director, Arctic Wilderness Campaign, US PIRG

Ann Mesnikoff, Washington Representative - Global Warming and Energy Program, Sierra Club

Alden Meyer, Director of Government Relations, Union of Concerned Scientists

Alan Nogee, Director, Energy Program, Union of Concerned Scientists

Ann Notthoff, California Advocacy director and Planner, Natural Resources Defense Council

Erik Olsen

Dan Reicher, Vice President, Northern Power Systems

Dave Ritter, Public Citizen

Rachel Shimshak, Director, Renewable Northwest Project

Tyson Slocum, Research Director - Critical Mass Energy & Environment Program, Public Citizen

Mindy Spatt, Media Director, The Utilities Reform Network

Carl Zichella, CA-NA-Hawaii Staff Director, Sierra Club