Posted on 12/19/2005 11:20:13 AM PST by calcowgirl
Californians are known to love a good, gory accident scene, but for those of us who like our violent smashups to be more metaphorical than real, the 2000-01 electrical power crisis is the gift that keeps on giving.
The latest near-corpse about which the paramedics are hovering is Calpine Corp. At this writing, the San Jose power company is wheezing toward an expected bankruptcy filing in January, possibly followed by extinction.
On Nov. 29 its founder and chief executive, Peter Cartwright, and its chief financial officer, Robert Kelly, were dismissed by the board of directors. Because they were leaders of Calpine's efforts to stay alive by selling assets, the expectations are that Chapter 11 is looming.
Calpine's problems are deeply rooted in the power crisis. For years after Cartwright founded the company in 1984, it focused on generating renewable energy, especially at its vast Geysers geothermal facility north of San Francisco. Then, in the late 1990s, California deregulated its energy market in what was viewed as a harbinger of a nationwide trend.
California's idea was to encourage its utilities to divest their own generating plants and buy power instead from independent operators. The utilities would concentrate on transmission and distribution of electricity, and the independents would build and operate plants. Somehow the purveyors and distributors would all make more money while the customers paid less, a creation of value from sleight of hand worthy of a conjurer's act.
(snip)
But the deregulation scheme proved a disastrous miscalculation. By 2000 the California power system had become a plaything for unscrupulous energy traders like Enron. Pacific Gas & Electric Co. landed in Bankruptcy Court and Southern California Edison came close. Customer bills soared. The market on which Calpine and other generating companies depended blew apart.
(Excerpt) Read more at latimes.com ...
This is a pretty good article. Anybody still have that CalPowerCrisis ping list?
But isn't the whole purpose of capitalism to channel greed into constructive activities? Brigands and pirates are suppoed to turn into productive citizens.
Also, if they are trying to sell natural gas - fired electricity, which costs $50-70/MWh to produce, on the open market, competing with nuclear $10-20 and coal $15-20 per MWh (approximate not exact), they are going to have a harder time selling their power. Green power is Socialism.
CalPine is simply another victim of the California State Government's refusal to actually deregulate the industry, instead setting up an artificial market mechansim (the ISO) which was staffed with truly naive types (i.e., academics) lacking in real world experience. Then, as it became obvious that this government monstrosity was falling apart, the State government (led by Davis) refused to revisit their creation, instead attempting to shift the blame to the private industry players. It is evident that the State government has learned nothing, as shown by their rule to allow only new plants to bid on SCE and PG&E contracts --- the assumption being that free bidding by producers free to raise prices if their costs go up will not work and that instead the only way to deal with this is via Government coercion. In short, they're still prisoners of socialist error!
There is new legislation that all out-of-state power producers supplying California will have to meet in-state laws. (Kyoto)
Make it impossible for anyone to build a power plant, and you will always be at the mercy of energy brokers, scrupulous or otherwise.
There were a couple of plants authorized and built at the height of the crisis, and its possible to permit small cogens, if you are willing to jump through all hoops they put in front of you. But its a lot easier to build them elsewhere, which always will leave you at the mercy of brokers, and high-line maintenance.
Make it impossible to build a pipeline, and you'll be at the mercy of line maintenance on the only line bringing gas into the state, too.
They are building an LNG plant in Mexico, which you could never get permitted in California. The gas will be pipelined across the border to San Diego. Don't be surprised if you see powerplants built on the Mexican side to service the California market. No one in their right mind would try to build anything in California. Its too hard.
Good post. The LA Times left out that important part, for some reason. It's like blaming the original course setting of the Titanic for everything rather than Captain Davis for not steering around the iceberg.
If that passes, California will surly be suffering blackouts again.
My brokerage acct. agrees with you.....Damn!
During the height of the crisis when Davis was starting to mau-mau the private parties, I corresponded with a number of journalists (including at the LA Slimes) about the aspects they were missing. They just didn't want to hear it (must not have matched whatever they'd been taught in school). They were simply committed to the idea that the crisis was caused by the half dozen or so instances where there was "gaming" by the private parties (prices were set hourly by the ISO, sometimes by the minute, so these instances didn't amount to a hill of beans). They certainly didn't want to hear about the instances (admittedly also a small number) where the ISO went back to private parties and required them to raise their prices as the original contract price didn't meet their socialist definition of "fair".
This intransigence on the part of State government coupled with the scapegoating of private industry was one of the reasons we elected to move out of California.
In my opinion, you should hope for its passage. The leftist and left-wing media's lockhold on the State is so thoroughly unshakeable (see Arnold's problems in achieving common sense reform) that nothing short of a major social breakdown will succeed in bringing about change.
It tickles me that Californians think they can make laws to control Detroit and other industries when they won't even make the changes to control polution in LA.
You remember this one, don'tcha???
Oh yes, I remember these guys.
Been following the story.....
I remember a few on the pinglist.
Thanks! I thought you were ignoring me! lol.
No, I just am not able to spend as much time here as I use to.....bad for my blood pressure.
I think tubebender was on the list also.
Well, hope you come around more often -- you are missed! :-)
But take care of your health first!
You make some interesting comments. The incompetence, liberalism, and economic ignorance of the Cal state legislature is one reason why I moved to Arizona. The high cost of housing and high taxes were the main reasons, along with an increasingly liberal and weird culture. Arizona is great; this state reminds me a lot of California in the 1970's when we had reasonable housing prices and reasonable people in the legislature.
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