Ghosts of Christmas Past
Scrooge fell upon his knees, and clasped his hands before his face.
“Mercy!” he said. “Dreadful apparition, why do you trouble me?”
I was scrolling the Journal last night and came across journalist Rebecca Smith's obit. Way, way deep in the back of my brain some neurons fired across corroded synapses. I clicked the link, oh yeah, that Rebecca Smith. Back in the 90s, when I was schlepping renewables in California, part of the weight was talking to the press. I had a several conversations with Rebecca. A particular one leaped forward. Some of the fossil fuel generators stock prices were heading south and I threw out maybe the industry had seen the future. She laughed and replied, “Yeah, I don't think that's it.” Well, you gotta take your shots whenever offered.
Reading the article, innumerable more neurons started firing, things long buried and wanting to be forgotten surged to the top. In 1996, California had passed a deregulation/restructuring bill for its electric utilities. The Journal writes the “ill-fated structure for the state’s new competitive electricity market… resulted in a political and financial crisis for California that led to the recall of Gov. Gray Davis and the bankruptcy of PG&E, the state’s largest utility company.”
The bill had passed the California Legislature unanimously. What passes unanimously? It was the Mr. Bill era, corporations would be untethered. The biggest and stupidest change was the utilities needed to sell some of their generation to third parties and then everyone would have to sell into this California Power Exchange (PX) designed by Harvard and Yale economists to set a price. The utility industry was and still is in desperate need of reform, but this made no sense.
Anyway, the PX was established. San Diego would become the first region open to prices set by the PX. And folks I kid you not, the day San Diego was, lets say vulnerable, beginning of summer 2000, every morning the price would immediately go straight to the top limit and stay there all day. After the first month, your average San Diegan saw their electricity bill double and triple. People weren't happy, don't worry, it gets better.
By the fall, the rest of state was starting to feel the price manipulation and the generators started pulling their plants offline to keep prices high. At the start of winter, in California the lowest time of year for electricity demand, rolling blackouts were initiated. Lord, what a shit show.
As they started blacking out, I talked with then Mayor of Oakland, former and future governor, whose former Chief of Staff was then Governor. We had just got the Oakland Council to become another municipality to vote to switch to a renewable provider. He asked me what I thought should be done. I replied the Governor should call the electrical workers and tell them go to the plants they've taken offline and bring them back online. If the new out of state owners give them any grief, send a truck of California National Guard to keep the plant gates open.
To his credit, the Mayor replied, “That would take a lot of courage.”
Ah well, one thing I learned in my years in American politics, courage ain't no commodity value. Beyond a doubt, if instead of courage, survival instincts had manifested and Gray foresaw his inaction to the fraud would cause him two years later to be the first and only California Governor recalled, he'd have instantly phoned those unions.
Most interesting about the Journal's article, it continues the myth a quarter century later that “supplies grew scarce in 2000 and 2001, forcing the power-grid operator to call for rolling blackouts several times as electricity prices skyrocketed." There were no supply shortages, it was complete fraud. But it is the Journal, markets are free and not manipulated. Funnily enough, it would take the ascendance of George W Bush and his appointment of Texan Pat Wood to head the FERC (Federal Energy Regulatory Commission) to step in and stop the theft.
In the end, it cost California at least $71 billion. The program I helped establish with a small coalition of environmentalists, renewable generators, business folk, and others, that had me talking to Ms Smith, proved the most successful of the legislation. Ironically, the first unplugged as it all went tits up – No more money for you!
At the time, I quite wrongly thought the scale of fraud would lead Americans to finally understand their political system was broken, but no one went to jail, the government purse just opened wider to many of the culprits. Instead of reform, it proved a model for the great Financial Collapse in 2008.
So it goes.
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