February 11, 2001
California's Panic Was Moneymaker for Energy Sellers
[A classic NYT headline of blithering obviousness]
By TIMOTHY EGAN and SAM HOWE VERHOVEK
_________________________________________________________________
F OLSOM, Calif., Feb. 9 The largest planned blackout of electricity
in California since World War II came in the midst of a heat wave
last June, when the mercury hit 103 in San Francisco, and
air-conditioners roared. Electricity supplies fell to dangerous
levels, and utilities cut power to more than 100,000 homes.
Even more of a shock than the thermal blast in a city known for
chilly summers was what came next.
In July, temperatures moderated and energy use fell, but
electricity prices still spiked up to the highest ever seen for
that month. California utilities paid about $4 billion more for
electricity than they did in the summer of 1999.
This pattern has continued. Even now, when energy demands in
California are at the low ebb for the year, electric power has been
selling at some of the highest prices ever seen.
The attorneys general in California, Oregon and Washington are
investigating whether the handful of power companies that sell
electricity to the state manipulated the market, cutting back
supplies to set off the threat of blackouts which then led to
higher prices and profits. The companies deny that they did.
<snip>
Some regulators contend the California market was toyed with by
sellers of electricity to give them an unfair advantage. And they
question whether the sellers deliberately took their power plants
out of service to reduce available supplies to drive up prices. The
regulators point to last August, for example, when the number of
power plants out of service was nearly five times greater than in
the previous August.
<end snippet>
And of course the NYT leaves out the fact that the sellers who are making profits and the buyers who are losing big are often both owned by the same holding companies, who can simply default on the losses and keep the gains -- although they are willing not to default if we pay for the losses and they keep the gains. And this doesn't count the $24 billion dollar gift they were given just a couple years ago to recover their "stranded costs" (i.e., their own bad investments) when the system was set up -- which they seem to have just pocketed and somehow don't need to account for.
Onward to the 19th century! Railway barons had nothing on these guys.
Michael
__________________________________________________________________________ Michael Pollak................New York City..............mpollak at panix.com