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Other Key Players in California's Energy Crisis

by J.A. Savage

"Gridnapped" feature on California's energy crisis
The deregulation fiasco began the day Jerry Garcia died. While deadheads in memorial tie-dye wandered the streets with a few bucks in their pockets looking for solace, sensimilla and one last miracle ticket, Pacific Gas & Electric. Southern California Edison, big businesses that live on massive doses of energy, and lawmakers laid the groundwork to get the state's 10 million ratepayers to fork over $28 billion to pay off utility management's and regulators' mistakes. Mike Florio, The Utility Reform Network senior attorney, thought that was a bad idea but at the time had little clue that the $28 billion bailout would pale in comparison with the harm to consumers and the economy that resulted in 2000-2001 in the wake of a free market held captive by the new owners of generation plants that PG&E was forced to sell in the deregulation deal.

California Governor Gray Davis paid no attention to deregulation when he moved into the governor's mansion, but he still took nearly $600,000 from utilities between 1998 and mid-2000. Davis was like a lucky charm in utilities' pockets just in case they ever needed a favor. While Davis has done a remarkable job looking like he's coming to the rescue of current electric meltdown, he's been twiddling his thumbs for months and waiting for the political savior of some other policymaker to take the fall. He also has not stopped taking campaign contributions from utilities.

Not only did Davis not go after utilities, he signed up about $460 million of taxpayer money to bail utilities out. Meanwhile, Davis has focused his energy ire on free-market companies who contributed little or nothing to his coffers. Major electricity generators Dynegy, Calpine and Reliant only scraped up $43,000 for the governor in the last few years.

Most observers think that what Davis does or doesn't do about the electricity crisis will make or break his political career -- surely a death sentence to someone so much a creature of politics. Self-preservation aside, Davis' electricity plans will impact the state's economy and everyone's pocketbook. Indeed, California's economy may not be the same after this winter's blackouts and wholesale electric price thunderstorms.

Much speculation about power plant owner saber rattling and utility tantrums has be in the air -- basically as methods to see who can get the best deal, or wring the most money out of ratepayers and taxpayers.

"No one wants to be left standing when the music stops," explained Gerald Keenan, lead energy strategy partner for PricewaterhouseCoopers.

Risk From Aging Nuclear Power Plants
Then there's nuclear power plants.

Nukes got a new lease on life with deregulation. The nuclear industry is beginning to think it can also build new nuclear plants for the first time in 25 years in the U.S.

A surprise to nearly all involved in the electric market, nuclear plants are currently about the cheapest source of energy available. As long as potential accidents aren't figured into the equation, nukes are providing electricity at about one-fifth the price of the electric market's going rate this winter. That noted, nuclear is cheap only because consumers have paid off the plants mortgages for utilities-with major interest. For instance, PG&E's ratepayers have forked over upwards of $32 billion for Diablo Canyon-a plant that cost $5.5 billion to build -- according to California Public Utilities Commission analyst Bob Kinosian.

Nukes are not only running flat out when they can, they are the grid's saving grace for the foreseeable future. There is no incentive whatsoever to shut them down despite public fears of radioactive leaks, and there's a move to store high-level waste on site at every plant from Point Beach (Wisconsin) to San Onofre (California).

The feasibility of new nuclear plants, and new owners of existing plants in the states, will be the subject of hearings at the Nuclear Regulatory Commission at the end of the month. Pocket nukes, officially called pebble bed reactor technology, are slated to be first built in South Africa. The technology is small and modular and aimed at settling down to serve areas that are crying for more electricity -- kind of like Northern California.

"If everything goes well in South Africa, it would be at least five years down the road" before considering new plants in the US, said Exelon spokesperson Neil McDermott. Exelon is one of the investors in the South African pebble bed plant. He quickly added, though, "None of that is even on the table."

Meanwhile, the Nuclear Regulatory Commission is making it much easier to extend the licensed life of nuclear plants for an extra 20 years. The process, with the apt acronym "GALL" (Generic Aging Lessons Learned), would allow existing nuclear plants to run for extra decades with no local public hearings or other public input. While the nuclear industry is confident that plants won't burst at the seams by running 60 years instead of 30 or 40, critics cite plenty of evidence that it's a bad idea.

"During the early stage of life and the late stage, the failure for both man and machines is generally higher than during middle age; the reliability of both man and machines is generally lower during the early and late stages. The prudent and proper course of action is to retire aging nuclear plants before they reach the point where reliability drops off markedly," notes Dave Lochbaum, Union of Concerned Scientists' nuclear safety engineer.

While nukes are a tough sell, the political reality of providing uninterruptable electricity will likely outweigh any safety concerns. Governor Gray Davis' press secretary, Steve Maviglio, after reviewing Davis' career's worth of statements found nothing, not a word, against nuclear power.

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Albion Monitor February 1, 2001 (

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