The NYT seconds Jordan

Michael Pollak mpollak at panix.com
Sun Feb 11 02:47:18 PST 2001


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



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