The way to look at this is by observing what happened to the long distance telephone market after Judge Greens broke up ATT's monopoly.
The same thing can happen in the power industry. There will be innovation after innovation creating hundreds of thousands of new jobs. It is not unreasonable to expect portable fuel cell generators run off of natural gas lines or stored propane to be placed in new residential home tracts and replacing old distributed power lines.
America does best when America lets its free market system work.
We have the same goals, so cut the ideological babble, OK? You have no idea who you are addressing. I have thought about it, a lot. My current occupation is all about designing transitions between regulatory and free-market systems.
California's production capacity has been artificially depressed by nothing less than regulatory racketeering over a period of twenty-five years. Environmental groups were funded in order to foist that shortage so that the companies owned by the tax-exampt foundations who funded them could make a killing. There are people who belong in jail. Bryson among them.
Now, deregulate in that environment again with that kind of shortage and the prices will spike in exactly the same manner they did before. Yes, investors would then race to fund construction and run into the same regulatory buzzsaw we have now. It's all happened before. It's an unnecessary shock to the system that creates irreversible and unnecessary damage to the customer base. It may be good for bankruptcy lawyers, enviro-litigators, and relocation consultants, but it's not good for California business. We are better off transitioning to a free market more slowly, even if it costs a bit more in the long run just to preclude the cost of that shock. It took us twenty five years to get into this mess; we can stand to be patient for a couple more to dig our way out.
The key is to increase the differnce between peak production capacity and peak demand. First, on the supply side, there is a fraction of capacity that can be increased relatively quickly by upgrading existing facilities. The whole point of eliminating new source review in those cases was to allow installation of cleaner equipment with marginally higher efficiency. That should move forward now. Second, there are a number of plants that have not been constructed but are permitted that pulled out their commitments in the middle of the mess a year ago. There is should be little to stop allowing those permits to be transferrable or renewable. Third, I would temporarily cap the profit on the sale of excess power by municipal utilities (only). On the demand side, I would instruct the PUC to ignore the meter-readers' unions and institute time-of-day metering on virtually all accounts as rapidly as possible. A program to put timers on electric water heaters similar to the referigerator rebate program would help there too. Fifth, I would work with the President on the Healthy Forests Iniative to get sufficient chips to existing biomass plants. The smoke from a power plant is a lot less harmful than the smoke from a forest fire given the same tonnage of material.
Power companies will accept a predictable return as long as they know that they won't get screwed later. There isn't a lot of difference to them between a moderate profit for longer and a wild profit for a few years followed by cutthroat competition (the usual pattern in deregulation). Two years is long enough to build enough capacity to soften the transition, especially with the reduced demand we have resutlting from the current recession. The regulatory cost of installations tying up construction funds, management, and personnel, is perhaps even a bigger downer to investing in California than is the PUC controlled market.
My guess is that within two years, the State could be ready to initiate a fully free market on the model of Texas. There probably will still be a bump in prices when the system releases to open market pricing because the State still needs an excess capacity of (my guess) 15-25% in order to accommodate both a recovery and an increasing population. The funds for that will come out of that bump. Two years isn't such a gory delay that offends the sensibilities of anybody who rationally supports free markets considering how long we have gone on with the existing stupidity. At least it keeps customers who can't tolerate the shock but can make it in the longer term from going bust unnecessarily.
Given that it will take some time to roll back some of the rules (assuming the legislature is willing), and the time it takes for businesses to commit to make the investment, I think California will be hard pressed to expect new capacity on a large scale within five years. Unfortunately, it's likely to become a crisis before then, and a certainty if there is another drought.
I'd love to see California decide to build a new nuke. There's no reliance on fossil fuels, and no pipeline or emission issues. But now I'm just dreaming...
It may be good for bankruptcy lawyers, enviro-litigators, and relocation consultants, but it's not good for California business.
Some businesses signed long term contracts that they are very happy with.
Was the breakup of long distance services years ago bad for business?
We are better off transitioning to a free market more slowly, even if it costs a bit more in the long run just to preclude the cost of that shock.
Sounds like a plan generated by a committee in the People's Republic of China.
Carrie_Okie:
I am not trying to insult you or argue but you accused me of ideological babble but what do you call your position other than ideology?
Also the ROI is a very important parameter in business planning that is linked to power prices. Even if the permitting process is streamlined, the pricing of power may preclude a decision to develop.
Lastly, there is nothing barring the currently contracted power providers form delivering power at a nonshock price for their remaining term while simultaneously allowing businesses to sign new contracts for new power services.
Good luck.