CA energy and the Bush regulators

Discussion in 'Politics, Religion, Social Issues' started by Sayhey, Sep 2, 2003.

  1. macrumors 68000

    Sayhey

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    #1
    The NYT has this column on the settlement of the companies who gouged California during the blackout crises:

    http://www.nytimes.com/2003/09/02/opinion/02KRUG.html?th

    I would draw your attention to the bottom line in this quote:

    Isn't it great to know our Federal Regulators are looking out for California consumers?
     
  2. macrumors 601

    zimv20

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    #2
    i like his analysis on deregulation:
     
  3. macrumors 68000

    mcrain

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    #3
    Well, considering we have no idea what Cheney and the Enron types did in their little secret meetings, how do we know whether or not the Bush administration is an agent of the energy companies?
     
  4. macrumors P6

    IJ Reilly

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    #4
    Re: CA energy and the Bush regulators

    That'll show us for voting for the wrong guy.
     
  5. macrumors 68040

    pseudobrit

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    #5
    They promised. Isn't their word good enough for you?
     
  6. macrumors 6502a

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    #6
    Ahh...

    Another biased tirade from liberal Paul Krugman.

    In the California energy crisis, there was no failure of the transmission grid, here, Paul Krugman is confusing recent history with past history. What caused the energy crisis is shackling power companies to buying energy in the spot market instead of making long term contracts... this is not deregulation.

    A watchdog agency already is there to prevent price manipulation, its called the Federal Trade Commission, and such acts are investigated by the Justice Department. This is what happened to Microsoft.

    As to preconditions to a deregulated energy market, there is only a handful of preconditions. One is a true deregulated market, allowing power providers to make or not make long term contracts. Also to make or not make power generation plants on property it owns without the burden of ligitation threats by parties claiming environmental or other imaginary perceived harm. Another is a fair way of compensating the owner of the transmission grid for using it to deliver power. This could be via contracts or outright purchase of the transmission grid. And finally, clear and concise billing that shows the amount charged per kilowatt-hour. Ever looked at your electricity bill, and wondered why all of these charges are there? Couldn't it be displayed as a cost per kilowatt-hour, like you see displayed on supermarkets for a can of Spam? Then, you would have various companies advertising their prices.
     
  7. macrumors 601

    zimv20

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    #7
    do you feel the ruling against the energy companies is fair and just?
     
  8. macrumors regular

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    #8
    really, can anyone defend what the energy companies did in california? Maybe it was "legal" but a lot of people got screwed and the energy comapnies made a LOT of money off it. There is a lot of eveidence of price gouging.

    I agree that California deregulation was flawed.
     
  9. macrumors P6

    IJ Reilly

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    #9
    No, it isn't. The FTC is part of the Commerce Department. The FTC took up the Microsoft question back in the early 1990s, but deadlocked and was unable to produce an outcome. Shortly thereafter, the Department of Justice began its investigation of Microsoft, and we know how that worked out. The agency charged with overseeing energy pricing is called the FERC. When it became apparent that the energy traders were gaming the California market, the state pleaded its case to the FERC, which ignored the issues being raised. More recently, in the face of overwhelming evidence, the FERC admitted that something was wrong, but refunded to the state only a tiny percentage of the money the energy traders had stolen from California's rate payers.

    It's nice work if you can get it.
     
  10. macrumors 6502a

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    #10
    Only way that people got screwed was when Gov Gray 'Recall-Me' Davis decided to use the state's coffers to pay for electricity. What should have happened is that electricity prices should have been allowed to rise to drive down demand.

    When you have multiple companies that some claim to have been conspiring to drive up prices, its pretty simple to use simple GREED to fix the solution. Let prices rise, this will drive down demand. If the prices were artificially high, then some enterprising GREEDY power provider will undercut their competitors to get a bigger slice of the shrinking pie. Consumers get a better deal since prices dropped. Now, and multiple GREEDY power providers jockeying for marketshare, and you get more lower prices until prices and demand/supply are in balance again.

    Power 'deregulation' where prices are artificially capped/floored is a market distortion, allowing all sorts of shennigans to occur.
     
  11. macrumors P6

    IJ Reilly

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    #11
    Nonsense.

    It isn't a question of "claiming" conspiracy, it's already been proven. It isn't a question of whether we've been robbed, only the amount is in dispute.
     
  12. Ugg
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    Ugg

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    #12
    False. The lack of sufficient transmission capacity north of Sacramento made it impossible to buy power from Oregon and Washington. Had there been sufficient capacity some of the fiasco could have been avoided.
     
  13. Ugg
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    Ugg

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    #13
    So we were supposed to unplug our refrigerators, go without hot water and essentially be forced back into the stone age in order to drive prices down. What about those who rely on electricity for their jobs? "OK, everyone, you're all on unpaid leave until those market forces bring electricity prices back to the levels where we can afford it again."

    Get real, electricity has become an integral part of daily life, while most of us can get by with less, the reality is that electricity has become as important as air and water in our everyday lives.
     
  14. thread starter macrumors 68000

    Sayhey

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    #14
    Frohickey, free market forces don't work in cases of monopoly or fraud. These corportations, starting with Eron, fraudulently manipulated the market to gouge consumers to the tune of billions of dollars. Now they are getting away with it for a fraction of penny on the dollar. Somehow, I don't think our problem is that we didn't just turn our electricity needs over to the "wisdom of the market."
     
  15. macrumors P6

    IJ Reilly

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    #15
    Demand for electric power isn't entirely inelastic, but it's not very elastic either. Significant reductions require major investments on the part of industry and homeowners, and this won't occur over night. We went on a major campaign at our house, replacing all of the high-service light bulbs with compact fluorescents, and buying a new refrigerator. The CRT displays on our computers were replaced with flat panels. Our energy consumption is down only about 15% and the cost of getting there was pretty huge.

    Overall, Californians did drive down their energy consumption during this (artificial) crisis by around 10% if memory serves. I didn't matter much because demand hadn't been up significantly before the crisis started, and demand wasn't the reason it happened. The cause was the manipulation of supply by the energy traders.
     
  16. macrumors 6502a

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    #16
    Krugman the Keynesian

     
  17. thread starter macrumors 68000

    Sayhey

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    #17
    Frohickey, the quote from Mr. Anderson only shows his own political bias. To describe Krugman as a "socialist" is just silly. Because an economist believes in regulation and government intervention in the economy doesn't make him a socialist. If Krugman was advocating the government take over of industry - that would qualify him as a socialist. Of course, Mr. Anderson's work with the Ludwig von Mises Institute, named after the guru of Libertarianism, would eliminate him from any bias, right?
     
  18. macrumors 6502a

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    #18
    Nope. Of course not. The Von Mises institute is a known libertarian think tank.
     
  19. macrumors newbie

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    #19
    Ugg, you commented, "The lack of sufficient transmission capacity north of Sacramento made it impossible to buy power from Oregon and Washington. Had there been sufficient capacity some of the fiasco could have been avoided."

    This may well be the case, although I've read that part of the problem was a general decrease in the amount of hydropower available from the Columbia River (drouth; low flow) and the refusal of Oregon and Washington states to sell beyond local surplus.

    At any rate, if capacity was an issue, you might ask why that was the case. California's need for an additional six thousand megawatts of either generating capacity or import-supply in the 2000-2010 period has been discussed for quite a while.

    When you add up a shortage in supply, an increase in demand, and government intervention in the market place, how come the usual answer to an Eco 101 question is "More gummint regulation!"?

    :), 'Rat
     
  20. macrumors 68040

    pseudobrit

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    #20
    Do you see the fallacy of using an openly biased source to dismiss him as a biased source? Twice on this board?

    If you don't like the message and you can't argue with it, shoot the messenger.
     
  21. thread starter macrumors 68000

    Sayhey

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    #21
    'Rat, how come you excuse the ultimate in government intervention, the invasion of another country, to guarantee stable oil prices, but when it comes to stable energy prices in California through government intervention to stop illegal manipulation of the market, you are all against it? Seems to me to be a contradiction, my friend.

    I think that some commodities, like electrical energy, are so critical to all sectors of the economy, we can not just allow market forces to go through the wide natural swings they would take, much less let companies get away with highway robbery.
     
  22. Ugg
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    Ugg

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    #22
    The PNW with its ample supply of federally funded hydropower (The BPA) has always supplied CA with power when it had extra. The PNW also trades back and forth with BC and Alberta. It is true, that due to low water flows that year, the PNW had less to sell to CA than usual, but a couple of new plants in Oregon had gone online that year and were unable to sell excess capacity to CA due to insufficient transmission capacity even though they built them with that in mind.

    The bottleneck has been a problem for years and is a result of nimbyism, regulation, the lack thereof, the explosive growth of energy intensive high tech companies, no federal or regional overseer of the transmission lines, etc, etc.

    The power system in the US is in a mess, I think we can all agree on that but the lack of a cohesive, long-term plan is what caused the problem. Isn't that what government is all about, to ensure that all the bits and pieces fit together?

    The transmission grid is the ugly little sister that no one wants tagging along but without it, we are all lost. How do we solve it? I dunno, but it sure ain't gonna happen if the govt. throws in the towel.
     
  23. macrumors regular

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    #23
    Yes there is no money in building transmission capacity. Californina demonstrates that lack of capacity can actually drive up profits, not to mention faux lack of supply. From the way some people talk you'd think govt. regulation was a dirty word.
     
  24. macrumors newbie

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    #24
    My problem is not with governmental regulation, in and of itself. My problem has to do with the "one size fits all" and "cast in stone" nature of the regulations or the thinking of those in the bureaucracies. I say this because of my own eleven years' experience in a state agency in Texas, and four years of working with various state and federal people in numerous environmental agencies.

    One problem I know of as to transmission of electricity is that of population shifts. Demographics. Ugg's comment, "The bottleneck has been a problem for years and is a result of nimbyism, regulation, the lack thereof, the explosive growth of energy intensive high tech companies, no federal or regional overseer of the transmission lines, etc, etc." certainly applies. However, the Nimbyism and threat of lawsuits over various issues--environmental, e.g.--has meant that federal or regional oversight couldn't help. The world's best plan is easily stalled for years by a lawsuit.

    Look. The Texas Coastal Zone Management Program had a Citizen's Advisory Council. It included every identifiable special interest on the Texas coast. We had folks from USF&WS, Natl Marine Fisheries, the head of the Texas Env. Coalition, and the head of the Audubon Society included. We also had politicos and industry people, plus farmers/ranchers. We had over 20 public hearings all up and down the coast for over two years, for "just folks" input.

    Didn't keep individual Sierra Clubbers from threatening lawsuits because we weren't doing enough to protect some danged thing or another...

    So I dunno. I've worked on two major planning efforts. I guess that at some point you get hard nosed and just figure to do the best you can for the most people you can, and to hell with the naysayers...

    Frankly, I'm not sure that you don't get equal results from back-room deals as you do from broad-spectrum public-input "plans". Sometimes I think maybe it's better for the "crooks" to make some money up front and get a job finished, than to be ten years behind and a lot more crooks make a lot more money--as happened in California.

    'Rat

    'Rat
     
  25. macrumors 68040

    mactastic

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    #25
    You know what 'Rat... There certainly are Sierra Clubbers who threaten lawsuits, but there are also "to hell with those environmentalists" developers who build things they know they could never get past the city council and just wait to pay the fine for their misdeeds. It's the "It's easier to ask for forgiveness than for permission" attitude I've run into among developers many times. I'm surprised you only see one side of this issue.
     

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