In the Dark in the Golden State

Regulators in Southern California, home to one of the most inefficient energy markets in the country, invite citizens to "Flex your power now!" by conserving energy in response to periodic alerts instead of facing the real price of energy in a heat wave. With consumers left in the dark about prices, it's no surprise more black-outs are expected this summer, along with very low traffic at the Conserve-O-Meter.

New technology is already here to help. If California energy prices did move with with consumer demand, users could cut costs with new price-tied meters that automatically adjust energy use based on information about price changes or peak hours.

Comments

[Charlie]

How in hell did my dumb ass state choose the "Flex your power" motto for a campaign about not having power?

[Ryan]

Those conserving incentives are such bullshit.

You end up setting the bar low, you get a quicky discount but the next year if you go over that bar, you get nailed.

[the regulator]

Argh. So many things to say, but I can't (if you take my name and know what state I live in you can probably figure out what I do for a living).

[Eric the .5b]

But gee, I thought California didn't really have any systemic problems with their electricity "deregulation" and that every blackout was due to conspiracy at Enron...

[JonBuck]

Eric:

The state's energy needs have grown since 2000. And it was Enron's own admission that caused the problems then.

That being said, I still think it was the badly-designed partial deregulation that enabled Enron to do what they did.

There's actually a new power plant being built in Escondido. First one in 20 years, I think.

[db]

I recently took an engineering job in the power industry with one of the largest investor-owned utilities in the country. Years ago, I had done an internship with a PA utility company during the first years of deregulation in Pennsylvania.

At the time, the need to be perceived as lean and competitive led to massive buyouts and layoffs that created an unfortunate brain drain in the industry.

Now, years later, the industry has realized that they need to staff up again. Opportunity in this industry for entering engineers is quite good now. It's openly admitted that most of the remaining old will be retiring in the next 5-10 years, not only creating many opportunities for younger engineers, but, unfortunately, finishing the brain drain begun 10 years ago. Hence the major companies are rushing to get new blood in and absorbing information from the old guard, fast, before they take the precious technical experience they've built up over 30 years with them.

---

I'm very much personally against regulation of the power industry, but deregulation has definitely led to an unfortunate situation: back in the days of regulation, if a plant needed an upgrade or an increased O&M budget, the owner could just go to the public utilities commission and get a rate increase to pay for it. These days, O&M budgets, as well as capital improvement budgets are pinched by the need to compete in a market for energy sales.

This is a situation that will need to be addressed, and thoroughly, if the plants in existence today are to be safely and productively operated for years to come. In addition, the current situation dissuades investors from approving large capital commitments like the construction of new plants. They are more likely to go with upgrades to existing plants, but unfortunately, if you do too much work to an old plant, the EPA considers it a "new source" for regulatory purposes. That usually has the effect of nixing the plan, as you may turn a $70 million (say) upgrade into a $400 million upgrade, when you take into account all the costs of complying with the stricter environmental regulations that accompany a "new source" ruling.

[sage]

Eric the .5b,

"But gee, I thought California didn't really have any systemic problems with their electricity "deregulation" and that every blackout was due to conspiracy at Enron..."

I like how you put "deregulation" in quotes like that, since what they called deregulation was pretty much a joke. And I think Enron's pretty much a dead horse. Feel free to continue to beat it though.

[M1EK]

"And I think Enron's pretty much a dead horse. Feel free to continue to beat it though."

No, around here, Enron is the Undead Horse, because it's a perfect example of randroid denial. Tapes and documents SHOWED IN EXACT DETAIL that Enron employees in fact DID do pretty much every bad thing that people on THIS VERY SITE kept claiming they didn't do, because their [Reasonites] ideology demanded that environmentalist NIMBYism be the villain in their set-piece.

[Hakluyt]

JonBuck,

Well, California did build a number of small plants in the 1990s.

[Isaac Bartram]

Maybe over at Forbes and WSJ they were singing the praises of Enron back in the days when they were asking for and getting favors from every pol they approached but libertarian publications identified them as crony capitalists very early in the piece.

Yep Cap Weinberger, Steve Forbes and the neocons at WSJ, the kind of libertarians everyone here loves to hang out with.

[Eric the .5b]

I like how you put "deregulation" in quotes like that, since what they called deregulation was pretty much a joke. And I think Enron's pretty much a dead horse. Feel free to continue to beat it though.

Very astute, but I wish you'd caught the sarcasm. 🙂

[Eric the .5b]

The state's energy needs have grown since 2000. And it was Enron's own admission that caused the problems then.

Enron definitely tried to exploit the frailties of the California power-regulatory system, but it's absurd to claim that California's current problems are simply due to the last five years of growth.

[Lucas Wiman]

While I think the deregulation in California was botched, and certain environmental regulations prevent the building of new plants, electricity is quite different from most commodities. It needs to be continuously produced, and consumption and production must be matched on a moment-to-moment basis. The extra capacity required during peak periods is therefore *really* expensive, since it might only get used for a few hundred hours a year. I think that even in a totally free market system, a power company might create a similar program, since it has the potential to reduce their costs.