State missed chance to fix energy problems

After a five-year reprieve, California now faces more energy problems. The media is trying to find out why. Over the weekend, the issue was covered in depth, from San Diego:

Among the most frequently cited factors for rising demand is that state residents are no longer following the strict conservation habits adopted during the 2000-01 power crisis. Those conservation efforts, urged upon Californians as a civic duty, sent demand for power down as much as 14 percent at times, according to the California Energy Commission.

At one point, said Claudia Chandler, a commission spokeswoman, conservation was saving 5,500 megawatts, or the equivalent of about 10 modern power plants...

Another factor contributing to rising demand is a resurgent economy.

To San Francisco:

Several panelists repeated warnings that Southern California could face power shortages again this summer but said the state is trying to prevent that by speeding up construction of near-finished power plants and keeping older ones running.

Paul Clanon, deputy executive director of the California Public Utilities Commission, described the crisis as the work of companies manipulating a flawed market poorly designed by state officials. He included himself in that list.

"It was manipulation by those (companies)," he said. "Are they to blame? Yes. Are the people who set up the market to blame? Yes."

Indeed, building electricity infrastructure--from new generation to the LNG receiving terminals that will fuel these power plants--is an important step to averting a future energy crisis in California.

TURN introduces Electric Reform Ballot Measure

Consumer Activist group TURN--The Utility Reform measure--will be circulating a petition to change the way we get electricity in California:

The Utility Reform Network has filed a ballot measure for circulation that would prohibit Californians from buying and selling electricity except from monopoly utilities and prohibit the state from billing residential customers using real-time meters and rates.

The stated goal is to encourage the construction of new generation--but it seems an odd way to go about it. Limiting consumer choice can never be good, and in order to average out the higher costs of peak-hour demand, consumers will probably pay on overall higher average rate per kilowatt hour. A better idea for building new generation might be to, say, run a ballot measure to build more generation.

Lawsuit threatens LNG Terminal in Mexico

A dispute over property ownership may block the construction of a liquefied natural gas receiving terminal in Baja California, Mexico:

A lawsuit filed in Baja California state court claims Sempra Energy LNG does not own the property on which it plans to build a liquefied natural gas receiving terminal.

Ensenada lawyer Carlos Gonzalez Castro filed the action on behalf of a Mexico City businessman who says he owns the land. Gonzalez says the property Sempra owns is really about three miles south of the parcel where the company is preparing to build its $670 million LNG complex. "All the studies and research and environmental analyses have been made on the wrong lots," Gonzalez said. "All the (government) authorizations are for the wrong point. The permits are not valid."

The suit was filed in Baja California state court in mid-November. A judge has ordered a legal notice to be included in Ensenada land records noting that the parcel's ownership is in dispute.

While that's a blow to Sempra, it may benefit California consumers if other LNG terminals--owned by other companies--are allowed to proceed, thereby introducing more competition in the local natural gas markets.

Business, Labor back LNG Terminal in Ventura

The Coalition of Business, Agriculture and Labor (COLAB) is backing the development of a liquefied natural gas terminal proposed in Ventura County. Its head, Andy Caldwell writes in the Lompoc Record:

A couple of different companies are proposing some projects that will bring a fresh supply of natural gas to California. One project proposes to build a barge-type structure that will be located more than 10 miles off the coastline of Ventura, far from the Marine Sanctuary and the shipping lanes. This project, called the Cabrillo port, plans on shipping liquefied natural gas to the barge and then piping it ashore.

It should come as no surprise that the folks at the Environmental Defense Center, with support from Congresswoman Lois Capps, are bad-mouthing the project any way they can, despite the fact that natural gas is slated to become one of the most important alternatives to oil and is considered a superior fuel with respect to the fact that it generates less environmental impacts than does oil.

Consider the fact that the folks at the EDC and Ms. Capps live in homes that need to be heated and they drive cars that need a fuel source. They fly in planes. They cook their food. They use electricity, oil, gasoline and natural gas just like the rest of us. Just where do they think we are going to get the resources that they themselves demand every day if they continue to oppose every means of production?

We only have a few sources of energy that are sufficient to meet the needs of our society. Unfortunately, we have cut off our nose in spite of our face.

SDG&E Proposes Peak-Hour Pricing

Anticipating electricity shortages as soon as this summer, Sempra's San Diego Gas and Electric is proposing hiking their tariffs during peak consumption hours:

The high rates are expected to yield only modest reductions in demand, but they underscore the growing urgency among regulators to balance electricity supply and demand this summer.

The so-called Critical Peak Pricing plan would triple electricity costs for the largest commercial customers – enterprises using as much or more power than big-box retail stores or supermarkets – between 3 and 6 p.m. on days when the plan is in effect. Those hours are when power consumption is typically the highest and most difficult to meet.

The rates would be twice as high as those imposed even during the worst of the state's 2000-2001 power crisis.

SDG&E's plan, which must be approved by the PUC, would also roughly double electricity costs for these big customers between 11 a.m. and 3 p.m. on emergency days.

This is a good move towards getting wholesale and retail electricity prices in-line with each other...

Utilities regain control of efficiency programs

Californians will have to trust Investor-Owned Utilities to promote energy efficiency, after action taken yesterday by the Public Utilities Commission:

California energy regulators voted Thursday to return control of energy efficiency programs to utility companies, ending a four-year experiment with allowing cities and independent groups to run some of the programs.

The California Public Utilities Commission voted 3-0 to make the switch, opposed by some consumer organizations.

The state spends about $400 million a year on energy efficiency programs, with 20 percent going to programs run by cities and groups independent of the utilities.

While we're at it, let's put ARCO in charge of promoting fuel efficiency!

PG&E, SMUD battle over Yolo Customers

Pacific Gas and Electric and the Sacramento Municipal Utility District are going to battle over customers in Yolo County:

In the first substantive volley of what could be a long struggle over the region's power future, PG&E today will begin sharing its initial, sketchy analysis of the proposed annexation with business and elected leaders.

The state's largest utility, PG&E would lose roughly 85,000 customers if Davis, West Sacramento, Woodland and nearby unincorporated areas of Yolo County are annexed into SMUD.

PG&E is readying a fat package of detailed financial and electric system data that should be completed in two or three weeks, spokeswoman Jann Taber said Thursday evening.

PG&E Claims rates would increase by 25% if customers were switched into SMUD. There are some saving graces to public power, however, as evidenced by the good things done by the Los Angeles Department of Water and Power--rates are low and service is reliable.

Could SMUD achieve such economies of scale with the new customers?

Refiner agrees to cut back emissions

ConocoPhillips has entered into an agreement with the EPA and Justice Department to cut back on its emissions:

ConocoPhillips, the largest U.S. oil refiner, will spend at least $525 million to reduce emissions at refineries in California and six other states, the Bush administration said Thursday.

The Houston-based company also agreed to pay a $4.5-million civil penalty for violations of the federal Clean Air Act and to spend an additional $10 million on clean-air programs, the U.S. Environmental Protection Agency and the Justice Department said.

The agreement will require ConocoPhillips to spend more than $525 million over eight years on pollution controls intended to reduce emissions by more than 47,000 tons a year, the government said.

The agreement covers nine ConocoPhillips refineries representing nearly 10% of total U.S. refining capacity, the government said. It is among the largest of 13 settlements the EPA has reached with U.S. refiners in the last four years

And you know how this story will play out. In a few months, politicians will start asking why gas prices are going up!

State Auditor OK's LADWP transfers

The Los Angeles Department of Water and Power can continue subsidizing the City of Los Angeles, according to the State Auditor:

...But the report by California Auditor Elaine Howle found that the transfer of $657 million in ratepayer funds from the DWP to the city general fund since 2001 was legal under the Los Angeles City Charter.

Sen. Richard Alarcon, D-Van Nuys, a mayoral candidate, had requested the audit last August, contending the transfer amounted to an illegal tax increase.

Rather than justifying the practice of transferring funds from the LADWP to the City's general fund, the report points more to Senator Alarcón's inability to ask the right questions.

At issue is not whether funds can or should be transferred to the General Fund, but instead, the question should as whether an increase in water or power rates to fund such a transfer constitutes a tax, which would be subject to Prop 13 rules.

Energy Secretary Nominee Samuel Bodman: LNG Safe

George Bush's Energy Secretary Nominee, Samuel Bodman, is sharing his thoughts on liquefied natural gas--a critical component in California's energy future--as he goes through the confirmation process:

Several environmentalists and local officials have blocked energy companies plans' to build terminals designed to receive shipments of LNG, calling the terminals terrorists targets and fire hazards. Bodman, however, seems to see LNG terminals as safe.

"With regards to the safety of LNG, my experience leads me to strongly believe that safe operation is not only achievable, but is to be expected," he said.

Environmentalists and local officials concerns over LNG terminals being built in their communities have spurred a debate over whether it's the federal government or state agencies that have authority over approving LNG projects. In fact, California energy regulators have recently taken the issue to the courts, arguing that the state agency, not the Federal Energy Regulatory Commission, should be able to decide whether or not an LNG terminal should be sited in Long Beach, Calif.

According to Bodman, the federal government is in charge. "I believe it is in the national interest for jurisdiction over the licensing of these facilities to reside at the federal level, just as it does for interstate natural gas transmission lines," he said. Dow Jones Energy Service

Lockyer asks for Nuclear Plant Security Enhancements

Loss concerned about a possible accident at a Nuclear generating plant than with intentional sabotage, California Attorney General Bill Lockyer is calling for increased security at San Onofre and Diablo Canyon:

California Attorney General Bill Lockyer and the attorneys general from six other states, warning of possibly unimaginable nuclear catastrophes, have called on the U.S. Nuclear Regulatory Commission to order action to protect nuclear power plants against terrorist attack by air and water.

Their seven-page petition, filed with the commission late Monday, says the federal agency should upgrade the plants' safety "to reflect the realities of 2005, beginning with an immediate recognition of what we all learned on September 11, 2001 ('9/11') and earlier -- terrorists may attack by air or water and in numbers greater than four."

"The United States has over 100 active and retired nuclear power plants containing thousands of tons of highly radioactive and toxic fuel, waste and equipment," their petition continues. "Some of these facilities are close to major population centers where tens of millions of people live. Any significant release of radiation from such nuclear power plants could cause unimaginable human injury and economic loss."

Central Valley Power Plants not Built

If you wonder why California may be facing blackout again in coming summers, blame Adam Smith's invisible hand...

"The prices were really high, and there was a lot of demand for electricity," said Chris Davis, a spokesman for the California Energy Commission. "But then the prices came down, Enron collapsed, and now we're in a situation where the lenders' confidence in investing in power plants is really shaken, and it's very tough to get lenders."

Sounds about right.

Teachers urged to support energy conservation

BP is encouraging teachers to make conservation a priority in the classroom--and there's free money involved!

Building on last year's first-ever and highly successful A+ for Energy grant program, BP has launched the 2005 A+ for Energy program. The 2005 A+ for Energy grant program awards $2 million in grants and scholarships to California K-12 teachers to implement creative and innovative educational programs to teach students about energy and energy conservation.

Any K-12 teacher currently teaching in a California public or private school is eligible to submit an application. The submission deadline is April 4, 2005. Winners will be announced by June 7, 2005. Applications are available via the Internet at www.aplusforenergy.org or by calling 1-714-228-6760.

LNG proposals facing opposition along coast

The San Francisco Chronicle looks at the opposition to proposed liquefied natural gas proposals along California's coastline:

Meanwhile, coastal residents are battling any business or governmental entity that tries to put a terminal near their property. Leaking LNG can form a vapor cloud capable of igniting in a fireball. Last year's accidental explosion at an Algerian LNG plant, which killed 27, only stoked the opposition.

"Anywhere the letters 'L,' 'N' and 'G' are put together, there's always going to be an element in the community that will have the same reaction," said Kent Robertson, a spokesman for San Jose's Calpine Corp., which last year ditched plans for an LNG terminal on Humboldt Bay.

Of course, if residents in Orange County who cannot afford to keep their homes warm want a culprit, they can look to Malibu, where the NIMBY mentality brought out opposition to BHP Billiton's Cabrillo Port proposal last December. Those affected by Malibu NIMBYism can take solace, at least, in the fact that they'll oppose anything...from an LNG terminal to a summer camp for blind children.

SoCal may face Electricity Shortages

About once a month, it seems there is another report predicting a lights-out summer for Southern California. The latest comes from the California Public Utilities Commission:

Southern California may have a tough time keeping the lights on next summer, state energy officials said Friday.

Officials from the California Public Utilities Commission and the operator of the state's transmission grid said a combination of growing demand for power, aging generating plants and not enough transmission lines could dim lights in the region.

Between NIMBYs and Environmentalists who claim that alternative energy holds all the solutions for the State, it wouldn't surprise me if we keep hearing such dire predictions for years to come.

Natural Gas prices put citizens on the rocks

Customers are learning the basics of market economics with natural gas prices in California--when demand goes up and supplies go down, prices increase:

It may be warm outside this week, but that's done little to quell the chills local residents are getting from winter heating bills invading mailboxes this month.

The bills reflect both a drop in temperatures and soaring costs for natural gas that are up for a third straight year.

Southern California Gas Co. projects this year's winter heating bills could be 34 percent to 50 percent higher per month because of rising natural-gas prices and colder, rainy weather.

"Wow!" exclaimed Pat Ortega when she got her $96.50 gas bill earlier this month - up from $57 for the same month a year earlier and $22 a year before that.

"I could understand a little bit of a hike," said Ortega, 74, who lives in a one-bedroom duplex in Orange. "But this is ridiculous."

The gas utility projects that this year's typical bill will add up to $90 to $100 a month for a single-family household consuming about 75 therms in a winter billing period. (One therm equals about 100 cubic feet of gas.) That's up from $67 last year.

While the factors driving demand--weather conditions--are generally out of our control, Californians can do more to increase supplies, and building an import facility for liquefied natural gas might be a good start!

Ford gives in Electric Trucks

After a California man successfully got Statewide media attention (and coverage from this blog!), the giant automaker has finally acquiesced to his request to keep his electric-powered pickup truck:

Ford Motor Co. made a U-turn Friday, agreeing to sell two electric-powered Ford Ranger trucks to a pair of California drivers who have refused to return their leased vehicles because the carmaker intended to scrap them.

David Bernikoff-Raboy and William Korthof, who have parked their trucks for more than a week at a local Sacramento Ford dealership in protest, said they were told by a Ford representative Friday that the trucks would be sold to them - for a dollar.

Shows you just how valuable Ford believes the electric car technology to be!

South Coast AQMD goes after BP-ARCO

Air quality officials are seeking $184 million from BP-ARCO for violations at its refineries:

Southern California's chief air pollution regulator filed a $184- million lawsuit Thursday against BP, alleging that the company had continually failed to fully inspect its Carson refinery for leaks of smog-forming chemicals.

It is the second such legal action by the South Coast Air Quality Management District against BP in two years. Together, the suits seek $597 million in penalties from the company, formerly known as BP-Arco.

The latest suit alleges that the Carson refinery repeatedly failed to maintain, inspect and repair thousands of pieces of equipment, including more than a dozen petroleum storage tanks, from 2002 to 2004, as required by law. The earlier suit alleged similar violations from 1994 to 2002.

Ultimately, however, it will be the customers who pay--in higher gas prices.

Greenpeace Mexico steps up against LNG

Greenpeace is ramping up itrs efforts to oppose two liquefied natural gas terminals in Mexico:

Greenpeace Mexico on Tuesday announced new efforts to block plans for a liquefied natural gas import terminal off of Mexico's Pacific coast near the U.S. border.

U.S. energy giant ChevronTexaco Corp. (CVX) already has the main federal approvals necessary for the proposed terminal off the coast of Tijuana near the Coronado Islands.

Greenpeace and the Mexican Environmental Law Center announced at a news conference on Tuesday that they are seeking to nullify the Environment Department's authorization.

The law center has helped five environmental and civic groups file legal complaints against the authorization, arguing that the Environment Department failed to gather sufficient scientific information about impacts on the Coronado Islands, an isolated bird nesting area uninhabited by humans.

If they were smart, Greenpeace would get the Sierra Club to back off of LNG terminals in California--where environmental regulations are more stringent--and join their efforts south-of-the-border.

FORD reconsiders Electric Truck recall

David Bernikoff-Raboy should be happy...Ford is giving his truck a second thought:

The software designer/ rancher from Catheys Valley in Mariposa County has been camping out at the Downtown Ford dealership on 16th Street with a handful of supporters protesting the carmaker's decision to discontinue leasing its electric-powered vehicles. His truck, along with a similar one owned by William Korthof of Pomona, are parked at the Sacramento dealership in protest.

Since the protest started Friday, the automaker has changed its stance. Carolyn Brown, a Ford spokeswoman in Dearborn, Mich., said the company would find a way to "make these owners happy." She estimated fewer than 100 of the trucks are still on the road and most of their leases expire soon.

"It's such a small number of owners, and we're going to take a look to accommodate them," she said.

Westly seeks Oil Probe

State Controller Steve Westly thinks California may be losing out on oil royalties:

State Controller Steve Westly on Tuesday called for a congressional investigation into what he said were unexplained anomalies in the prices for California-produced crude oil in recent years that have sharply reduced both state and federal oil-lease royalty income.

"California receives less revenue per barrel for its oil" while consumers here pay "more per gallon [of gasoline] than anywhere in the nation," Westly said in a statement.

The controller said the crude oil produced in California — the heavy variety from the San Joaquin Valley and elsewhere — was selling for an unusually low price compared with the price for the U.S. benchmark crude known as West Texas Intermediate.

Ford seeks to scrap experimental electric truck

The auto industry has decided that the electric car was basically a failure. Hybrids, it appears, are the wave of the future, and they are catching on with customers. But one Ford EV lessee likes his eco-Ranger:

David Bernikoff-Raboy's license plate says "PLUGINGO." He wants to keep plugging in his electric-powered Ford Ranger pickup truck, but Ford Motor Co. says it's a no-go.

It's the end of his lease and the company wants the vehicle back to scrap it.

Bernikoff-Raboy, who uses the truck for commuting and hauling supplies to his Catheys Valley ranch in Mariposa County, said he does not want to give up his zero-emissions truck, which uses no oil or gasoline.

Canada considers Cali model for Car emissions

When Governor Gray Davis signed legislation mandating fuel efficiency and emission standards, a major concern was that companies would either not make products for the California market or make consumers pay heavily for it. Now, other governments are considering following California's lead:

Canadian officials, who are considering regulations to reduce carbon dioxide exhaust from cars and trucks, are spending a few days this week getting a firsthand look at their primary inspiration: California.

Although Canada has not decided whether it will follow California's lead by requiring automakers to cut greenhouse gases to combat global warming, the country's environment minister noted Monday that doing so could have a powerful cumulative effect.

If Canada and New York and other Northeastern states all pass California-style greenhouse gas regulations, "we would be at least a third of the market," Environment Minister Stephane Dion said. "It is always difficult for Canada to go alone."

It's difficult for anyone to go alone, and California will be lucky each time another market follows its lead.

The End of Oil?

Jalopnik asks an interesting question about the future of fossil-fueled automobiles...

Storms hurt, benefit utilities in Southern Sierra

While storms wreaked havoc across Southern California this week, Central California felt the hit has well.

During the siege, Pacific Gas & Electric Co. scrambled to fix widespread outages that temporarily shut down 80,000 customers in Fresno, Madera and Merced counties Friday. Southern California Edison Co. also worked around the clock on outages, particularly in Shaver Lake, where several feet of snow fell during the weekend.

Both utilities reported most customers are back in service.

"It's snowing again in Shaver Lake," said Edison-area manager Glen Cardaronella on Tuesday. "But there are no high winds, like there were before."

While the blackouts are bad, when you hear "Snow" and "Shaver Lake" in the same sentence, there is a silver lining for Californians--Hydroelectric Fuel for next Summer!

Auto shows bring hope for Hybrids

Hybrid vehicles are taking center stage at this week's Detroit and Los Angeles Auto Shows, but the future cannot come soon enough:

Ford Motor says it will build more hybrids than announced and do it sooner than planned. General Motors says it is leaping closer to real-world hydrogen fuel-cell power. Volkswagen banged the table at the Los Angeles auto show a few days ago about the need for more diesels.

But each alternative-power vehicle on display at the shows or scuttling around downtown here advertising its maker's prowess is carrying a heavy load of challenges. Before any of the promising alternatives makes a difference in oil consumption or air quality, prices have to come down, reliability has to be proven, consumers have to be sold, and in the case of hydrogen, cheap, safe and convenient ways have to be found to make, transport and dispense the fuel.

A new fuel dawn it truly seems to be. But midmorning might be a long time coming.

"Internal-combustion engines are here for the foreseeable future," says Ford's Mary Ann Wright. That's no small acknowledgment for the enthusiastic director of Ford's hybrid and hydrogen vehicle programs. Still, she swears, "There'll come a time when everything's a hybrid; it's inevitable, because of the fuel economy and performance and (air pollution) benefits."

Truck Stop to take over Bakersfield Refinery

The troubled Bakersfield refinery--slated for closure then sale by Shell, investigated by Senator Boxer--has a new owner:

The aging refinery produces 2 percent of California's gasoline and 6 percent of its diesel. But given the extraordinary tightness of the state's fuel market, Shell's original plans to close the refinery prompted protests from consumer advocates, elected officials and others. One leading energy economist said the plant's closure could lead to price spikes of 10 percent or more during times of peak demand.

Shell backed down under public pressure and agreed to look for a buyer. On Monday it said it will sell the plant to Flying J Inc., a Utah-based oil company that owns a chain of truck stops. There are six Flying J's in California, including one in Lodi.

Long Beach to reconsider threats of LNG

Of the several liquefied natural gas facilities proposed in California, only one is on-shore in an urban environment. In light of reports that terrorists may target LNG facilities, officials in Long Beach are questioning the wisdom of putting such a terminal in the heart of their City:

In the wake of a federal report that said Liquid Natural Gas terminals could be potential terrorist targets, the City Council will look at just how appropriate such a terminal would be for Long Beach.

While the City Council will have a workshop, as requested by Eighth District Councilwoman Rae Gabelich, it will not be making any decisions at this time...

The study session will be about the plans of Sound Energy Solutions (SES), a subsidiary of Mitsubishi Corp., to build a 27-acre, $400 million liquid natural gas terminal in the port that would open in 2008. The terminal could handle up to 68 million barrels of liquid natural gas (LNG) a year.

Whether a threat is real or remote, even the fear of an attack would lead one to think that a facility, say 14 miles offshore, would make alot more sense.

California Gas Prices Near Nadir?

It might be time to fill up your tanks, as California gas prices appear to be bottoming out:

Experts say the two-month decline will likely end in the next few weeks as refineries begin temporary shutdowns to gear up for producing summer blends of gasoline and demand for fuel begins to rebound.

After that, most analysts expect prices to begin climbing again, squeezing not only consumers but also retailers of unbranded gasoline, who have taken advantage of surpluses to scoop up bargains and undercut the prices of major oil companies.

"We are at, or very close to, the bottom of gasoline prices," said Michael Shames, executive director of San Diego's Utility Consumers' Action Network. "When the decline is over, there is going to be a rude awakening. We are nervous that we're going to see $3 gas this spring."

Feinstein asks for Hybrid HOV waiver

Hybrid drivers in California must wait until Congress approves legislation to permit California to allow them into the State's HOV (carpool) lanes. U.S. Senator Dianne Feinstein is working to make that happen:

"Hybrid vehicles are the wave of the future, and we should be doing everything we can to encourage their use," Feinstein, D-Calif., said in a statement.

"Changing the law to allow these hybrid vehicles to use diamond lanes certainly makes sense. I hope that the Senate will act on this legislation quickly."

The first day senators can propose legislation is Jan. 24.

Feinstein's proposal would allow California and other states to set their own regulations for allowing hybrid vehicles into the car-pool lanes, which are typically reserved for cars with two or more occupants.

Under California's newly passed law, hybrids achieving a 45 mpg fuel efficiency would qualify -- at this point, only the Toyota Prius and Honda's Civic and Insight.

Lights out for Green Power

Green Power--alternative energy sources from non-fossil fuels--may be the wave of the future, but experience in Los Angeles is showing that customers are not willing to pay more to protect the environment:

Today, fewer than 2 percent of the DWP's customers are signed up for the Green Power Program, and the number is declining, although millions of dollars was spent to market it, using the controversial contracts with the public relations firms of Fleishman-Hillard and the Lee Andrews Group.

Since it was launched in 1999, the program has been the subject of glowing national press coverage -- and stinging internal audits, which found that the conservation effort included more than $4.8 million in marketing costs.

Enrollment in the program has dropped from a peak of nearly 100,000 of the DWP's 1.4 million electricity customers to about 27,000 today.

Credit cleaner-burning natural gas which packs more environmentally and economically-friendly power to the punch.

Sierra Club to Organize against LNG

The Sierra Club is holding a meeting to recruit opponents of Liquefied Natural Gas, calling it, "just another polluting foreign fossil fuel." Of course, they fail to mention that natural gas is increasingly becoming California's greatest clean-burning fuel for electric generation. So basically, they want people to advocate a return to the dark ages of blackouts and soaring prices. Maybe some people to show up on January 11. For information they say you can call Ariana at (805) 564-6694 or email savethecoast@sierraclub.org.

Pipeline Dispute contributes to high Gas Prices

For every story about Barbara Boxer investigating Gas Prices Soaring!, there is a behind-the-scenes look at why gas prices in California always appear out-of-whack with the rest of the nation. Today's Los Angeles Times explores one small issue that affects all Southern Californians:

Kinder Morgan is best known as one of the nation's largest "common carrier" pipeline operators, a business that involves collecting fees in return for carrying gasoline, diesel and jet fuel from refineries and ports to the fueling terminals where tanker trucks load up. It owns all the major fuel pipelines in California and is required to serve all customers equally, charging rates set by the federal government...

San Francisco-based Chemoil, a $3.5-billion, worldwide supplier of heavy marine fuel oils, created a subsidiary in 2004 to crack the gasoline market.

To make way for the fuel business in Southern California, Chemoil upgraded at least one port-side storage tank in Long Beach to hold fuels like gasoline instead of heavy fuel oils. The company also built a pipeline to carry the imports to Carson, where the company converted enough storage capacity to hold more than 500,000 barrels of gasoline, diesel, jet fuel or their key ingredients, Chemoil manager Barry Hamberg said at the state oil-market hearing.

Then Chemoil sought a direct connection to Kinder Morgan's system, assuming it would be granted without much fuss, because most of the region's refiners have just such a connection from their own tank farms to the pipeline at issue.

It didn't turn out that way. Kinder Morgan is awaiting approval to build 19 massive new fuel storage tanks at its Carson facility — which would compete with Chemoil's Carson storage facility for customers.

And in the end, as always, the customers end up paying.

Energy-Telecom Convergence in Future?

Looking ahead for 2005, Robert Shively, Partner at Enerdynamics LLC, predicts a convergence between traditional energy utilities and telecommunications:

You might be surprised to learn these technologies aren't just some engineer’s lab project, rather, they are being rolled out successfully in the field right now. What are they? They are technologies called Broadband over Powerline (BPL) and Fiber-in-Gas (FIG) that have the potential to allow energy utilities to provide last mile broadband Internet connectivity to houses and businesses through the utilities’ existing energy distribution facilities. To learn more, read on.

History of the "Energy/Telecom" Convergence
Energy companies originally became active in telecom for a solid business reason. Back in the early growth years of the Internet (the distant 1990's!), pipelines and electric utility companies often already had fiber laid alongside their facilities for their own internal uses. And access to rights-of-way that could easily be used to install fiber. Thus the development of backbone fiber was a natural. However, some energy companies wanted to diversify and tried to also offer services that were competitive to the telecom industry. There they met up with well-financed, aggressive and industry savvy competitors such as Level 3, Qwest, WorldCom, and AT&T. And when the telecom business came crashing down in the Dot.com bust, those energy companies who invested heavily in telecom crashed with them.

The New Opportunity
One result of the Dot.com bust is a wealth of cheap, underutilized backbone fiber. Unfortunately, this fiber isn’t useful until connections can be made to the ultimate consumer (the so-called "last mile"). And it is the last mile where new opportunities lie. Currently, about 91% of American zip codes have at least one option for high-speed Internet connections. Yet only about 15% of possible consumers have chosen to subscribe. Contrast this to a country such as South Korea where it is estimated that 60 to 70% of homes are connected to broadband services. In fact, the U.S. languishes at 11th in the world in number of broadband connections per inhabitant. This may be because service costs are also higher in the U.S., where broadband connections generally cost greater than $40/month. Many of the countries with higher penetration rates have services that range from $22 to $35/month. Industry observers believe that both access to broadband service and lack of perceived value versus subscription costs are holding down penetration rates in the U.S. Yet in a rapidly globalizing world where even white collar jobs are moving to international locations, failure to join the broadband revolution has the potential to disadvantage many Americans.

This may help the most in rural areas where repeated attempts at deregulating telecom services to make it easier to build the newer infrastructure for that "last mile", such as the Tauzin-Dingell bill, have failed.

P.R. Abuses at LADWP Should not have been a surprise

Ratepayers in the City of Los Angeles must wonder just how badly they have been bilked over time by the agency which has apparently been left un-managed for the last four years. The Daily News is reporting that abuses by public relations contrctors at the Los Angeles Department of Water and Power should have surprised no one. They knew about it two years earlier:

Los Angeles Department of Water and Power auditors reported finding more than $350,000 in overbillings by two public-relations firms as early as 2002, but their warnings were ignored by utility managers who renewed their contracts worth more than $5 million a year, the Daily News has learned.

According to interviews and documents released under the California Public Records Act, DWP officials missed a critical chance to root out abuses discovered by their own auditors before they became swept up in the "pay-to-play" scandal that has engulfed Mayor James Hahn's administration. The contracts were only terminated earlier this year after City Controller Laura Chick began assailing them as part of her audit that accused the public-relations firm Fleishman-Hillard Inc. of $4.2 million in DWP overbillings.

Back in November 2002, DWP internal audits questioned the legitimacy of $300,000 in billings by Fleishman-Hillard and $52,000 in charges by the Lee Andrews Group. The two politically connected firms were consulting the DWP under contracts that gave Fleishman-Hillard $3 million a year and Lee Andrews $2.4 million a year -- contracts that were renewed after their billings were questioned.

"It appears that (the internal audit) was ignored," said Michael deCastro, a private auditor whose firm, Thompson, Cobb, Bazilio & Associates, was hired by Chick to scrutinize Fleishman-Hillard bills.

Admittedly, DWP did catch some over-billing:

According to e-mails and other internal documents released under a California Public Records Act request, records show that Department of Water and Power auditors repeatedly questioned bills from Fleishman-Hillard Inc. and the Lee Andrews Group, both in formal audits and in written questions to top DWP managers.

In one case, Fleishman-Hillard withdrew $288 in billings for liquor, wine and beer served at a June 2000 dinner meeting at the City Club on Bunker Hill. It was hosted by David Freeman, then the DWP's general manager, to promote his Integrated Resource Plan.

You'd have to hope that DWP management was drinking some of that booze when they overlooked the millions more they were bilked out of over time!