Stable, reliable, low-cost electric power was the objective of electric deregulation. We are in a transition period that is giving us everything but those desirable qualities. There are rolling brownouts. There are skyrocketing electric bills. This is not stable, reliable or low cost!
I heard testimony in San Diego from residential and business customers who had seen their monthly electric bills double and triple in one month’s time. Senior citizens were unplugging their refrigerators to save money. Restaurateurs were paying thousands of dollars more for energy with no way to raise their prices. Consumers were deciding they could not go out to eat as often because of their high home electric bills. This is the beginning of an ominous downward spiral for business activity and business investment for California. We must stabilize the rates immediately.
Because Californians have enjoyed reliable delivery of energy for many years, the only time they protest or experience concern about electricity in their home or small business is when they open their monthly bill. And, as the headlines have demonstrated, many Orange County residents reacted strongly and negatively to their June, July and August bills. While high summer-month bills are extremely distressing, the underlying problem runs much deeper and the potential for blackouts this summer and the next is very real.
The factors that contribute to the erratic prices and the potential for blackouts are complex. It is due to a combination of past decisions and current conditions. In the 1950s and ’60s at the behest of state regulators, utilities over-invested in building power plants, creating capacity beyond need and incurring debt that consumers would pay for over many years. As the economy heated up and population expanded, demand grew to meet and surpass the capacity built by utilities. On the other hand, communities grew reluctant to have power plants built in their backyards. To avoid the thorny political issues involved in locating new plants, utilities were encouraged to meet growing demand by purchasing energy from sources outside of California.
Nearly two-thirds of California’s power plants are 30 years old or older. There have been virtually no new plants added to the system in the last decade. Furthermore, the power lines that transmit the electricity are aging and strain under the growing demand. Trying to upgrade and build new power lines is nearly as ticklish a political issue as constructing new power plants.
In spite of an often tumultuous marketplace since deregulation in 1996, the electric power industry has tried to build new power plants in California. Since 1996 there have been 17 applications filed with the California Energy Commission to modernize existing power plants and to build new ones. Five have been licensed, but due to the lengthy licensing and permitting process they are only now beginning construction and will likely not help California meet its urgent need for electricity this summer or next.
For San Diego Gas and Electric customers who have experienced the frustration of erratic prices, there are several short-term solutions, some recently ordered by the California Public Utilities Commission and some previously planned, that are providing immediate financial relief.
Beyond immediate measures to offset the current erratic prices, what can we do to keep the lights on in California? The following are several suggestions that will help both in the short term and long term:
n The state of California should develop an emergency curtailment program to reduce electricity demand during peak times on short-term notice. This would mean reducing consumption in state facilities such as office buildings, prisons and universities.
n We, as electricity consumers, should reduce our usage by turning off lights, unused appliances and computers, by raising the thermostat for air conditioners and shifting electrical usage to night and early morning times when demand is lower for items such as swimming pool motors, dishwashers, and clothes washers and dryers.
n The California Energy Commission should develop power plant siting rules that shorten and streamline the process for new plants.
n The California Public Utilities Commission should expedite proposals currently under consideration that would provide market-based mechanisms that reward consumers for reducing electricity consumption during supply shortages. For example, Southern California Edison wants to increase the incentive to consumers who participate in the voluntary power reduction program.
n The state Legislature should adopt new laws to encourage development of power plants rapidly, by giving preferential treatment to power providers who will agree to stable rates and who will not export their power to other states.
n The California Air Resources Board should waive rules that restrict businesses with backup generation facilities from utilizing them as a power source during peak periods.
n The state Legislature should authorize the expenditure on a one-time basis of general funds to offset the overpayments of SDG & E; customers,residential, schools, non-profits and local governments,for the excessively high summer bills.
n The Legislature should extend the transition period for all investor-owned utilities until there are sufficient generating plants to produce a true market for electric energy.
California is facing a crisis, one created by poor planning by industry, slow action by regulators and unexpected demand. The result is that California is entering the 21st century with a 1960s infrastructure. This summer and the next, as consumers we will feel the financial burden of a system in need of attention. I hope the frustration caused by erratic rates will force industry, regulators and lawmakers to finally address this pending crisis. If not, we may all be left in the dark.
Campbell, R-Villa Park, is the Assemblyman from the 71st District.
