Failing California: When private means public
Whatever happened to Reddy Kilowatt? I have indelible childhood memories of the friendly power company mascot extolling the virtues of electric power on radio and television. Reddy’s purpose was to encourage all and sundry to purchase more of the reliable, inexpensive electricity being produced down at the power plant: Capitalism 101.
That was before green regulatory agencies inverted the incentives for success. In 2007, Pacific Gas & Electric began saturating the Northern California airwaves with “Flex Your Power” ads featuring recycled Gore-isms such as “Global warming is a choice,” and concluding with a plea for listeners to save the earth by refraining from buying anything sold by PG&E.
Incidentally, PG&E’s marginal price for residential electricity, at 49.78 cents per kilowatt-hour, is nearly five times the national average of 10.54 cents per kilowatt-hour.
Why would a private business mount a publicity campaign saying, essentially, “If you care about humanity, if you value the planet, if you want your children to thrive, please stop using our products”? A glance at the PG&E web site provides the answer:
Does PG&E earn more money by selling more electricity?
No. PG&E collects a fixed level of revenue, determined by independent regulators, regardless of actual energy sales. If energy sales are higher than the approved level, the excess revenues go back to customers. If sales are lower than the approved level, the shortfall is recovered the next year through a rate adjustment. PG&E actually earns incentives by achieving energy efficiency targets that may reduce sales. This system has helped California keep per capita energy use flat over the past 30 years, while the rest of the nation has seen a 50 percent increase.
Under the “fixed level of revenue” regulatory scheme, the only way for PG&E to get ahead is to do less: less output, less customer service, less of everything at ever-higher prices: Socialism 101.
It’s hardly a surprise that California’s manufacturing businesses, which disproportionately depend on affordable electricity, are relocating elsewhere. As for Reddy Kilowatt, all I have is a forwarding address -- in Shanghai.
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May '10
Re: Failing California: When private means public
At 49 cents per KWH, the home generator is more and more feasible, and it is time to convert the lawnmower into a power turbine. That will lead to a requirement that the EPA outlaw lawnmowers.
Re: Failing California: When private means public
Duane, if only. Between the Bay Area Air Quality Management District and the California Air Resources Board it's tough to fire up a backyard barbecue, never-mind your own conventional generator. BAAQMD actually employs 70 field inspectors who roam our streets on calm winter nights searching for someone using a fireplace or wood-burning stove. The fine for committing warming-by-fire? $400.
May '10
Re: Failing California: When private means public
A Weber grill is outlawed in the Bay area? No wonder everyone moved to Arizona and Texas. Are you allowed to use gas logs instead of wood? Next: every houshold shall be equipped with a CO2 detector, which is a standard CO detector with an isotope variation. If the permissible threshold is exceeded, one member of the household is required to stop exhaling and connect her breath capture tank.
May '10
Re: Failing California: When private means public
I would be tempted to install my own power generation capabilities (solar, geothermal, whatever) if I lived in California just to be independent of these folks. Although I bet out there you all have regulations for your solar panels too. It's a shame that California is not literally paradise on earth just because 55-60% of the electorate out there keeps picking the wrong people to do the job.
Re: Failing California: When private means public
Mr. H
Photovoltaic arrays are seriously cool technology and, speaking as a certified geek, I love the stuff. However, speaking economically, solar power is mainly a plaything for the wealthy. Consider that even with a 50% tax subsidy up front and electric rates five times the national average, the payback time for a NorCal rooftop solar installation is seven to ten years. And that's assuming you start with a roof that won't spring a leak for the duration.
May '10
Re: Failing California: When private means public
Oh, how these problems in California would disappear with a removal of the obstructive regulations on the production of power via nuclear energy. An increase in the number of nuclear plants would simultaneously increase the supply of electricity, thereby decreasing the price of electricity, and cut emissions of greenhouse gases, thereby reducing pollution. Sigh.
Re: Failing California: When private means public
Michael, you're absolutely right. The political attractiveness of any particular electrical generation technology is inversely proportional to its commercial readiness. Stipulating for the moment to the most extreme worries about carbon dioxide, where does this leave us? Nuclear is thought too risky and hydro -- the only truly cost-effective form of solar power -- too hard on the fish. Instead of generating electricity when we want to use it, we are in theory constrained to use power only when the sun shines or the wind blows. In reality, when Californians' utopian ideas run up against reality we have Nevadans burn coal for us and ship the electrons over the border.
Re: Failing California: When private means public
I just drove from SF to LA, all along Interstate 5. I think I spotted a couple of spots with enough nothingness around that would be perfect for one or two nuke plants.
May '10
Re: Failing California: When private means public
The simple solution for constructing nuclear power plants is to construct the plants on military bases. These plants would not be owned by the government, but by private industry.
Not only is the Security to protect the plants readily available, the NIMBY crowd is mitigated in its response.
May '10
Re: Failing California: When private means public
Building nuclear power plants on military bases would also better enable insurance companies to insure such plants by reducing the risk of terrorist attacks. Many opponents of nuclear power claim that it is uninsurable.
May '10
Re: Failing California: When private means public
No no, Native American reservations as the hosts. You get the deniability of foreign soil, a landlord eager for passive revenue.
Regarding the PV, if they could get the conversion factor up above 10%, and ensure that the cells would remain sealed, you might be able to make a 7 year payback (forget a positive IRR; opportubity cost is too high). Which is too bad. I made my first PV cell at age 14, plated the silicon to have a solder terminal, broke the wafer and had to re-plate. Neat stuff.
But this is about government. Who says the investment needs to make sense?
Re: Failing California: When private means public
Duane, I like your idea of locating nuclear power plants on Native American reservations. We could put one in the meadow behind my house. An old family story has it that I have a Native American ancestor -- I'm waiting for my genotype report from 23andMe.com next month. If things work out, I was angling for a casino at my house -- think of it as the real Savage Nation -- but a power plant might be a more socially worthwhile endeavor. What think?
Edited on May. 24 at 8:43pmRe: Failing California: When private means public
What am I supposed to do George? They outlawed using my fireplace, and I think I am not supposed to use my BBQ.I found out my front yard grass is now illegal. They have passed a law in our city that says I need to put a separate meter on the irrigation system. The politicians and legislators have gone nuts. I wish we could get paid for doing less. We have to take our State back as well as our Country from these goofball non-producers.
May '10
Re: Failing California: When private means public
With apologies for the California arcania, George, could you please explain why the CA State R's have endorsed Prop. 16? Seems to me this is an attempt to insert politics to squash an initiative to introduce competition in the electricity generation market. Is it just about supporting "business" against lefty tree-huggers? Because it feels like a market-based solution would be to go ahead an allow municipalities to introduce choice. Thx.
May '10
Re: Failing California: When private means public
All of the NANny (Native American Nuke) installations should be the small, factory-built, buried modular units, so we can bypass another 200 years of DoE review. Just plug in a bunch of these: http://www.innovation-america.org/archive.php?articleID=509
And, as an "IMBY-Please!" neighbor and prospective NANny-qualifier, George gets his own.
May '10
Re: Failing California: When private means public
Duane, I've read and heard enough about small, sealed, buried modular units to believe they are the best option. I'm disappointed we don't any in use yet.
Re: Failing California: When private means public
Trace, I can't explain half the things the California Republican Party does. For the uninitiated, California Proposition 16, on the ballot next month, requires 2/3 voter approval before town fathers and mothers use taxpayer money to get their municipalities into the electricity business. The primary backer is our local utility, Pacific Gas & Electric. So, all us right-of-center folks should line up against, right? Not so fast. PG&E is privately capitalized but essentially government-run. As Trace points out, isn't some competition, even in the public sector, better than no competition at all?
May '10
Re: Failing California: When private means public
I was beat reporter in Rancho Cucamonga when that city endeavored to begin a municipal utility. I've been meaning to follow up on their experience in light of the upcoming Prop 16 battle, but what I remember vividly were the long line of SoCal Edison employees that testified before the City Council vehemently opposed to the project. Naturally, they didn't mention their work affiliation.
In the years since, I've never had strong views about whether municipalities should be in the utility business or not, but I can attest that the utilities are so heavily regulated that they've ceased to be purely private enterprises.