Almost everyone who lived through California’s 2000-2001 energy crisis remembers rolling brownouts and blackouts, plus thefts in the billions of dollars from California consumers by Texas companies like Enron and Reliant Energy, which purposely shut down power plants to create an electricity shortage and raise prices and profits.
This was classic market manipulation, enabled by California’s 1998 electricity deregulation law, which encouraged regional movements of electricity across state lines.
Now a new report commissioned by California’s Legislature — ever a sucker for multi-state regional schemes — amazingly claims a return to something similar would actually prevent blackouts in California as this state transitions to more and more use of renewable energy drawn from wind, solar and hydroelectric sources.
As with almost every electricity plan pushed since the Enron scandal, this one uses the “blackout blackmail” tactic, promising “regional cooperation, lower prices and more efficient use of transmission lines.”
The big problem is that all this can only work if there’s no market manipulation. But the energy crunch early in this century demonstrated that where manipulation is possible, profit-driven companies will manipulate.
That’s why Oklahoma’s Williams Companies got involved 23 years ago. It’s why Enron saw multiple executives convicted in Houston and jailed after major trials. It’s why executives of those firms openly laughed about “robbing grandmas in California.”
“What the Legislature is discussing today is pretty identical to a plan that was rejected in 2018, when (then-Gov.) Jerry Brown pushed it,” recalled Jamie Court, head of the state’s premier consumer advocacy group, Consumer Watchdog.
These schemes, which seem to arise every few years, are partly driven by utility companies’ longtime desire to build more multi-billion-dollar long distance transmission lines, which produce guaranteed profits of about 14% for 20 years on every cent spent to erect them.
Ideas bearing the word “regional” are often popular because of the notion that bigger is better. But regional electricity transmission organizations (RTOs) manage multi-state movements of power mostly to benefit the companies that own the power lines.
Even though the new report from the National Renewable Energy Laboratory (NREL) says the opposite, joining a Western RTO could thwart California’s goal of becoming 100% reliant on renewables by 2045. For states like Arizona, Utah and Nevada are replete with coal- and oil-fired power plants that no longer exist in California, but whose output could be mixed with renewable energy from in-state sources.
Meanwhile, the Federal Energy Regulatory Commission under ex-President Donald Trump adopted a requirement for RTOs to counteract state-level renewable energy policies. How does that square with California’s longtime aims?
Of course, this state officially recognizes the transition to all-renewables may create problems for a while. That’s why it is letting PG&E’s Diablo Canyon Nuclear Power Plant operate at least five years beyond its previously scheduled closing and keeping open outdated natural gas-fired generating stations for “peaker” use when power consumption is highest.
No one knows exactly how today’s power companies around the Southwest would manipulate the very different situation a Western regional grid would create, but the motive would be exactly the same as during the energy crunch — big profits.
Plus, states involved include the same ones currently trying to create a new system for maintaining their own use of Colorado River water while forcing California to make cuts. One big problem they have with this is that it runs afoul of current law and contracts.
So the possibility is strong that companies based in those states would act against California much as they did during the energy crunch and just as the states themselves are trying to do now.
What’s more, if California joins a regional grid, it will cede much of its energy planning authority to a board of directors where this state would be a minority, despite having far more population and power users than the other states combined.
This makes no sense, but the Legislature got exactly the report it asked for, when it plainly assigned the NREL to help it justify joining a regional grid.
So far, California has avoided adopting such a self-destructive plan. But with current lawmakers plainly inclined in that direction, this state is in danger of being manipulated into another serious energy crunch.
Email Thomas Elias at [email protected].