Monday, August 29, 2005

Energy situation at critical juncture

Solving California's energy woes has been a case of two steps forward, one step back, as Patrick Dorinson explains in Capitol Weekly:

It has now been 5 years since California was in the throes of the 2000-01 energy crisis, and we don’t seem any closer to a comprehensive plan for securing our energy future. In fact, we are at a crossroads that could determine whether we take a step back into a failed past or take a step forward into an undetermined future. Make no mistake, California is riding the edge of the supply-demand curve once again and without bold action, the situation will only get worse in the next few years.

The step back is illustrated by the appearance on the November special election ballot of Proposition 80, sponsored by The Utility Reform Network (TURN). TURN’s initiative would effectively end California’s eight-year attempt to change the way electricity is bought sold and delivered to the customer. It would return us to the "good old days" of cost-of-service based system. It has something for everyone, including a provision accelerating the state’s 20 percent renewable requirement from 2017 to 2010. It would also end the direct access idea that has allowed large industrial and commercial consumers, including the University of California system, to shop for power. It would probably be the end of independent generators investing in new power plant construction.

Talk to anyone in the industry familiar with financing power plant construction and they will tell you that Prop 80 would chill future power plant investment in California by the merchant generators, and possibly force them to abandon California altogether.

Energy problems can be solved, however, as suggested by a recent meeting held under the auspices of California Energy Commission Chairman Joe Desmond. The utilities, the generators and the large customers attended, and while there was no real consensus, it was the first time that otherwise warring factions sat down to try to hammer out a solution that will advance the evolution of a workable energy market.

We have so far dodged the blackout bullet this summer, but we’re heading into next summer with the same level of uncertainty that has greeted every summer since 2000. How do we get ourselves out of this vicious cycle and develop a system that can lower prices, provide reliable electricity, encourage new investment and innovation, and someday put choice in the hands of the consumer where it belongs?