{"id":1470182,"date":"2024-06-08T19:10:00","date_gmt":"2024-06-08T23:10:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1470182"},"modified":"2024-06-08T19:10:00","modified_gmt":"2024-06-08T23:10:00","slug":"is-california-moving-toward-government-owned-electricity","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/is-california-moving-toward-government-owned-electricity\/1470182\/","title":{"rendered":"Is California Moving Toward Government-Owned Electricity?"},"content":{"rendered":"

Is California Moving Toward Government-Owned Electricity?<\/span><\/p>\n

\n

Authored by John Seiler via The Epoch Times,<\/em><\/a><\/p>\n

In 1929, almost a century ago, the great economist Ludwig von Mises<\/a> published \u201cA Critique of Interventionism.\u201d<\/strong><\/p>\n

It\u2019s written in plain language and is free online<\/a>. He described how government intervention in the free market is not socialism, but eventually \u201cleads to socialism because government intervention is not only superfluous and useless, but also harmful<\/strong>. … It lowers labor productivity and redirects production along lines of political command, rather than consumer satisfaction.\u201d<\/em><\/p>\n

He died in 1973 at the good old age of 92 and was the teacher of Friedrich von Hayek<\/a>, who won the Nobel economics prize in 1974.<\/p>\n

I bring up Mises because he could have been writing about California\u2019s electricity market, which has been dysfunctional for three decades and well could end up entirely run by the California government. <\/strong><\/p>\n

That\u2019s actually what was called for in a June 2 editorial<\/a> in the Los Angeles Times titled, \u201cCalifornians don\u2019t have to accept skyrocketing electric bills. Here\u2019s how to fight back.\u201d<\/strong><\/em><\/p>\n

<\/a><\/p>\n

The way to fight back?<\/strong><\/em><\/p>\n

\u201cCustomers of publicly owned utilities such as the Los Angeles Department of Water and Power pay lower electric rates in large part because a profit margin isn\u2019t part of the equation. Gov. Gavin Newsom threatened to take over the troubled PG&E during its last bankruptcy if it didn\u2019t become a more responsible utility. <\/strong>Ultimately, the governor struck an oversight deal<\/a>. But a public takeover is still worth exploring<\/a> to protect Californians from unaffordable rates.\u201d<\/em><\/p>\n

The internal link for \u201cis still worth exploring\u201d clicks to a 2019 L.A. Times editorial<\/a>, \u201cWe\u2019ve reached a point where public ownership of PG&E shouldn\u2019t just be on the table, it should be actively explored by state and local officials.<\/em><\/strong> Newsom has hinted he would open to public takeover of the utility and has raged about its \u2018corporate greed<\/a>,\u2019 but he has also said he wants to see as many bidders for ownership as possible, including from other profit-making entities. Although it\u2019s good for him to consider all approaches and all bidders, public ownership shouldn\u2019t get short shrift in the process.\u201d<\/em><\/p>\n

The first obvious hurdle to \u201cpublic ownership\u201d\u2014socialism\u2014is the Fifth Amendment<\/a>, which concludes, \u201cnor shall private property be taken for public use, without just compensation.\u201d <\/strong><\/p>\n

Here are the valuations of the state\u2019s two largest private utilities:<\/p>\n

PG&E<\/a>: $48 billion<\/em><\/p>\n

Southern California Edison<\/a>: $82 billion<\/em><\/p>\n

Total: $130 billion<\/em><\/p>\n

Where is the state of California supposed to get that kind of money?<\/strong> Float a bond? The state treasurer list California\u2019s current state bond indebtedness at $71.7 billion<\/a>. And they\u2019ve only started issuing the $6.4 billion in new bonds for Proposition 1<\/a>, which voters passed last March 5. In sum, a state takeover effectively would nearly triple state bond indebtedness.<\/strong><\/p>\n

California\u2019s Electricity Reform Collapse<\/h2>\n

Instead of looking to the supposed price gouging by the private utilities, as the L.A. Times demands, it\u2019s worth remembering the state\u2019s own follies the past three decades during which I\u2019ve written against all the anti-market attempts at restructuring. For those who want to read the details, a good history of the early years is, \u201cThe History of Electricity Restructuring in California<\/a>,\u201d from 2002 by Carl Blumstein, L.S. Friedman, and R.J. Green.<\/p>\n

The attempt at \u201cderegulation\u201d the authors begin with is Assembly Bill 1890, which Gov. Pete Wilson signed in 1996. It\u2019s worth adding something they left out: 1996 was the only year in the past five decades in which Republicans controlled a house of the Legislature, in that case the Assembly under Speaker Curt Pringle (R-Anaheim), later Anaheim\u2019s mayor. Mr. Wilson also was a Republican. So this was a Republican attempt at \u201cprivatization,\u201d with cooperation from Senate Democrats.<\/p>\n

AB 1890 set up the California Power Exchange (PX), which \u201cwas required to operate an hour-by-hour spot market, in which generators could sell and retailers could buy power. … The new markets began operation for April 1, 1998. This was three months behind the original start date, but it had not proved possible to create the necessary computer systems in time.\u201d It seems every computer system the state sets up has problems. \u201cThe PX ran quite smoothly, with low prices.\u201d<\/p>\n

Then disaster struck.<\/strong> <\/em><\/p>\n

\u201cLate in the spring of 2000 the California\u2019s new electricity market began to collapse. In May the average PX price was $50\/MWh, higher than any previous month. There were also numerous price spikes. … By the end of January, the collapse was complete. Blackouts occurred on eight days during the winter and spring even though demand was far below the summer peak. The Power Exchange suspended operations, and the CAISO [California Independent System Operator), SCE and PG&E were all insolvent.\u201d<\/em><\/p>\n

For some reason the study didn\u2019t mention Gov. Gray Davis\u2019s role in this crisis<\/strong>. I remember in October 2000 he actually took a month off to \u201cstudy\u201d the problem. Then he panicked and signed contracts up to 20 years for natural gas at the height of the market price.<\/p>\n

In June 2002, Withold Henisz of the Wharton School at the University of Pennsylvania described<\/a> the damage: \u201cWholesale energy prices shot up tenfold and supply shortages forced repeated rolling blackouts. The crisis forced the state\u2019s biggest utility, Pacific Gas and Electric, into bankruptcy and pushed another, Southern California Edison, to the brink. In desperation, California Gov. Gray Davis signed long-term contracts for $48 billion worth of power\u2014prices two to three times today\u2019s [2002] market rate.\u201d But some of the contracts had to be paid for up to 20 years.<\/p>\n

Mr. Davis\u2019 mistakes were part of what led to his recall in 2002 and replacement by Gov. Arnold Schwarzenegger.<\/strong><\/p>\n

Arnold Schwarzenegger\u2019s AB 32 Disaster<\/h2>\n

In his first two years in office, 2003-05, Mr. Schwarzenegger governed reasonably, cutting taxes and restraining spending. Then in November 2005, voters rejected his plank of reform initiatives<\/a>, such as banning using union dues for political campaign initiatives. He then flipped from conservative to liberal as he headed to his November 2006 reelection, which he won.<\/p>\n

His signature legislation was Assembly Bill 32<\/a>, the Global Warming Solutions Act of 2006, still in effect. Among its mandates:<\/p>\n

\u201cIt is the intent of the Legislature that the State Air Resources Board consult with the Public Utilities Commission in the development of emissions reduction measures, including limits on emissions of greenhouse gases applied to electricity and natural gas providers regulated by the Public Utilities Commission in order to ensure that electricity and natural gas providers are not required to meet duplicative or inconsistent regulatory requirements.<\/em><\/p>\n

\u201cIt is the intent of the Legislature that the State Air Resources Board design emissions reduction measures to meet the statewide emissions limits for greenhouse gases established pursuant to this division in a manner that minimizes costs and maximizes benefits for California\u2019s economy, improves and modernizes California\u2019s energy infrastructure and maintains electric system reliability, maximizes additional environmental and economic co-benefits for California, and complements the state\u2019s efforts to improve air quality.\u201d<\/em><\/p>\n

You can see the duality problem there: The state is supposed to both limit \u201cgreenhouses gases\u201d for electricity production while maintaining \u201celectric system reliability.\u201d<\/strong> It\u2019s hard enough for private companies, or for that matter socialist government enterprises, to maintain one government dictate. But two dictates make it doubly difficult, even impossible.<\/p>\n

Renewable Energy and EV Mandates<\/h2>\n

Next, throw in renewable mandates, such as this<\/a> from December 2022: \u201cThe California Air Resources Board today approved the final proposed 2022 Scoping Plan, a world-leading roadmap to address climate change that cuts greenhouse gas emissions by 85% and achieves carbon neutrality in 2045. The 2022 Scoping Plan provides a detailed sector-by-sector roadmap to guide the world\u2019s fourth-largest economy away from its current dependance on petroleum and fossil gas to clean and renewable energy resources and zero-emission vehicles.\u201d<\/p>\n

Renewable energy, such as wind and solar, requires expensive new power lines on top of the existing power lines. The zero-emission vehicle mandate is for 100 percent new cars to be zero-emission by 2035.<\/p>\n

And now AI\u2014Artificial Intelligence\u2014is developing rapidly in Silicon Valley, which leads the world in this area, and requires even more electric juice every year.<\/strong><\/p>\n

Finally, there\u2019s the latest attempt at reforming sky-high electricity rates, which I wrote about last week in, \u201cNew California Electricity Scheme Promotes \u2018Equity,\u2019 \u2018Clean Energy Transition<\/a>.\u2019\u201d It\u2019s only going to make matters worse.<\/strong><\/p>\n

It\u2019s been three decades of folly and disaster. No wonder for March 2024 the Energy Information Agency pegged<\/a> California\u2019s average residential rate at 32.47 cents per kilowatt hour (kwh), the second-highest in the nation. North Dakota\u2019s was the lowest, at 10.44 cents.<\/p>\n

In a future article, I\u2019ll discuss some free-market remedies to restore to California a sensible electricity market and lower prices for consumers.<\/em><\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nSat, 06\/08\/2024 – 15:10<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/political\/california-moving-toward-government-owned-electricity<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Is California Moving Toward Government-Owned Electricity? Authored by John Seiler via The Epoch Times, In 1929, almost a century ago, the great economist Ludwig von…<\/p>\n","protected":false},"author":0,"featured_media":1470183,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-1470182","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","wpcat-1-id"],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pbimBl-6asC","jetpack_featured_media_url":"https:\/\/bugaluu.com\/news\/wp-content\/uploads\/sites\/3\/2024\/06\/image20287129_1-cPc9l9.jpeg","_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1470182","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1470182"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1470182\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media\/1470183"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1470182"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1470182"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1470182"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}