The Bitter Battle over Energy


Dynamos and Virgins, by David Roe, New York: Random House, 218 pp., $18.95

It is possible to forget that there once raged a bitter battle over energy and electric-power-plant construction. In the wake of the energy crisis, so-called advocates of growth urged the need for vastly expanded electrical production and a crash program of nuclear construction. On the other side, environmentalists argued for conservation, efficiency improvements, and "soft," small-scale, renewable technologies instead.

Among the latter was a young lawyer named David Roe, who has written a book about how he and a handful of friends at the Environmental Defense Fund (EDF) succeeded in largely reshaping utility planning in California. Ironically, Roe is himself the great-grandson of George Roe, founder of the Pacific Gas and Electric Company (PG&E), whose battle with EDF over expansion plans is the major story of Dynamos and Virgins. At stake was an ambitious expansion program that PG&E proposed by way of justifying rate hikes before the California Public Utilities Commission (PUC). Overall, PG&E planners envisaged spending $13 billion for new construction over the decade 1975–84, including five new nuclear plants. These projections were well in line with the growth-oriented forecasts typical at the time, which generally assumed a continual exponential growth in electricity-generating capacity.

It therefore came as a shock to conventional sensibility when a number of upstart young environmentalists claimed that these numbers were completely overblown and that electrical needs could be met more cheaply with no central plant expansion at all through improved efficiency, conservation, and small-scale renewable technologies. Among the first to argue this case in public were Roe and the EDF at hearings before the California PUC. They drew heavily on the work of a young economist named Zach Willey, whose analysis showed that PG&E could make a better return on investment if it bought conservation improvements for its customers than if it built new central power plants—a radical notion to the electric-utility industry.

Radical or not, EDF's analysis turned out to be largely on target. The extent of EDF's victory can be judged by the fact that it eventually persuaded not only the California PUC but many utilities, as well. In the end, PG&E withdrew all of its plans for proposed coal and nuclear plants, investing instead in conservation, "load" management, geothermal energy, cogeneration, and the like. The significance of EDF's victory is all the more apparent in light of the construction bust that has subsequently swept the utilities industry, notably the Washington Public Power Supply System (WPPSS) fiasco, in which bondholders have lost billions of dollars invested in canceled nuclear plants. What is unclear is how long the present hiatus in new plant construction will continue and how much of it is due to purely economic factors as opposed to political and regulatory obstacles in plant siting and design.

From today's perspective, it is easy to forget the atmosphere of polarization that characterized the debate between environmentalists and proponents of growth. Radical environmental groups such as Friends of the Earth came forth with visions of a radically transformed America, forgoing automobiles and modern conveniences where necessary with a new, frugal lifestyle. On the other hand, proponents of growth cast themselves as embattled friends of capitalist free enterprise opposing a new class of "coercive utopians."

Critics of coercive utopianism may well be put off by Roe's background: a lawyer working out of Berkeley with unabashed countercultural sympathies, who relishes the appearance of subversiveness. The author's goals are scarcely modest, as he describes how EDF set out with aims no less ambitious than those of his great-grandfather, to effect "as radical a rearrangement of society's investments as the one that had followed the concept of central dynamo-stations in the first place." Roe goes on to note that unlike his entrepreneurial forebear, he would rely on legal briefs, witnesses, and computers instead of capital to advance his ideas.

Yet however much we may mistrust the legal profession, the point can rightly be made that legal weapons were a legitimate means of challenging PG&E given that it was a legal monopoly under public regulation. Roe makes a strong case that PG&E, like many public agencies, had grown into an essentially conservative and cumbersome bureaucracy, the planning efforts of which were woefully inadequate (Roe recounts how an executive officer in charge of PG&E's planning proved unable to define the term marginal cost despite having used it in testimony). Without EDF's intervention—and without the sympathetic attitude of the administration of Gov. Jerry Brown, which, whatever its other faults, was often more cost-conscious than that of his predecessor, Ronald Reagan—it is quite likely that California utility customers would have ended up paying much higher rates.

A saving grace of Dynamos and Virgins that the author takes pains to disassociate himself from environmentalist extremists, whose value-laden rhetoric he appears to regard as distasteful. Rather, Roe emphasizes that EDF wished to make its case entirely in economic terms—a strategy pioneered by EDF. In this spirit, he explicitly rejects the anti-nuclear issue as irrelevant. He harbors no hostility towards big business, insisting that "EDF's most ambitious goal was not to bludgeon utilities into change with the clumsy weapons of regulation, but to win them over with the attractions of a new way of thought." Roe thus does much to dispel the stereotype of coercive utopianism.

Another virtue of Dynamos and Virgins is that it is well written. The author displays a novelist's talent for storytelling and a flair for salient detail in describing the personages and tactics of bureaucratic wrangling, the ploys of dress and personal style, and the art of computer-model testimony. Readers like myself may, however, be irritated by a touch of elitist Ivy League cockiness in the author's manner.

More disturbing is Roe's admitted lack of technical or economic expertise, along with his unquestioned faith in Willey's econometric model, which he describes as "legerdemain" and "intellectual judo." Nowhere in his book does Roe explore the possibility that his adversaries might have been right on some points, or that the real reason for their capitulation might have been due less to economics than to politics; nor does he go into any of the dubious tax-subsidy schemes that California adopted to promote solar energy. This leads to the troubling question of how Roe knew that EDF was right in the first place. It is hardly reassuring that he writes, "Presumptuous as it would surely seem to anyone else, we took our factual superiority for granted." Unfortunately, this kind of attitude leaves one with little more confidence in the author than in the adversaries he bested; instead, it reminds one of earlier Ivy League whiz kids whose misadventures in Vietnam have been memorialized in the chronicles of "the best and the brightest."

Dale Gieringer has a doctorate in engineering-economic systems from Stanford University.