----- Original Message ----- From: "Doug" <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]> Sent: Wednesday, October 23, 2002 11:41 PM Subject: Re: N. Korea Says Has Nukes
> Dan Minette wrote: > > It wasn't the worst of any worlds for the providers that came away with > billions in profits. It was definitely the worst for California who > lost a $4 billion surplus and went deeply into hock overnight. http://www.energy.ca.gov/electricity/operational_capacity.html lists 3 investor owned California utilities: Pacific Gas and Electric and South California Edison are the two biggest ones, and have 95% of the capacity of the three between them PG&E reported a 3.3 billion dollar loss for that year and filed bankruptcy. Edison International reported a 1.9 billion dollar loss for that year and narrowly avoided bankruptcy. I couldn't break out California, but the annual report for Edison International gives the impression that other branches of the company were, on average, profitable. How is this a big win? SDG&E was the third, and is part of Sempra, and it appears that Sempra was still profitable during 2000, making about 400 million. However, since SDG&E is only a small part of a larger company that made a profit, its not clear whether SDG&E made a profit or loss. Even if you include this profit as all coming from California, which is probably not valid, the three companies lost more than 4 billion. It seems to me that everyone misread the situation. Even companies, like Enron, who profited by gameplaying in California, lost enough elsewhere to less profitable gameplaying, so that it went bankrupt. Yes, the officers fleeced the company, but its losses were far bigger than their gains. >> So, a company had to be foolish to > >supply California with electricity for less than they'd get elsewhere. > > > Ok, that's at first... What's a first? > > > > >Plus, the costs of generating electricity went through the roof for some > >suppliers. Those that used natural gas, 40% of California's suppliers, saw > >that price go from under $2.00 to as high as $9.00 on the spot market. > >People producing with natural gas would have to lose money to fit under > >California's cap.> > > > > But of course later on, when they learned how to game the system there > was lots of money for all the big boys. Not all of the big boys. The two big companies who had to play it by the book lost over 5 billion in a year and were on the brink of elimination. Indeed, I'm guessing that they were the strongest presence pushing for deregulation. They played the game and lost big time. > The beginning of 2000 was the height of the crisis after which massive > conservation measures were taken. Considering that, the numbers above > by themselves don't mean anything. There is no thought to looking ahead? California's policy was based on the assumption that the spot market for energy would always be cheap. With the .com boom and a hot dry summer, they were relying on cheap spot market prices to keep energy costs down. When the spot market for gas went through the roof, they were hurting. The policy of buying on the spot market at the last split second is foolish, to say the least. The logical thing would be to have long term contracts that allow retail prices to rise if fuel costs rise. Retail prices rising would cut use more than anything. Further, what big conservation measure are you talking about? The drop in usage from 2000 to 2001 was only 4%. The consumption fell to the 1999 level. And, we cannot attribute all of this drop to conservation measures. The summer was cooler in 2001; and industrial use dropped with the .com bust in 2001. Given the fact that the 2001 consumption was close to 1999 consumption, I don't think we can attribute much more than 1% or so to conservation measures. And, the indications are that the usage rose again in 2002. The bottom line is that, to first order, people tend to conserve only if there is a significant financial incentive to do so. > I won't argue that the restructuring was done very poorly. I will argue > that it would have been in the best interests of the industry that > _desires_ deregulation to pounce on California like a lion pouncing on a > wounded animal. Dereg. was set way back, and Ca. is suing the industry > to the tune of $9 billion. Interestingly enough, deregulation just passed through in Texas. > > > >I'm rather disappointed in the Sierra club using the "up to" line. That > >statement is true if there is one small, high polluting, inefficient plant > >out there. > > > Why do you hold the Sierra Club to a higher standard than commercial or > political institutions that wouldn't bat an eyelash at using such > language when they have to compete against these institutions for media > attention? Because I had considered them a reliable source of information. Now, they are not in my book. They also don't provide details from which I can make my own conclusion. I can tear apart a financial report and understand what's really going on. In short, I certainly don't assume that, just because an company has an ad, its accurate. I assume that I have the tools to get at the information from the details they provide. The Sierra Club report had no meat, just fluff. > After 2000? I'd vote for that in a second. Run by the same folks who's business judgment was so good, they decided that the spot market would always be cheap? The problem would be that, if rates had to be raised to prevent long term problems, and it was an election year, they couldn't be raised. The government would keep on pushing the problem back until there was a crisis, and then hope that someone else would be in power to blame it in. I think a better choice would be to have competitive bids to run facilities, allowing for a fuel cost surcharge, as we have in Texas. If new facilities are wanted, then either the government will have to guarantee income from them, even if use is down, or offer a situation where the potential profit outweighs the risk of loss. Unfortunately, there is little incentive for either government or industry to look ahead. California was a particularly bad example of what happens when there is a bad mix of market forces and governmental price control. The problem with your suggestion of responsible corporate citizenship is that those corporations that are responsible lose their shirts, while the ones who are not make big profits. Even if 90% of the companies are responsible, the other 10% will win big, making the 90% look like chumps to their stockholders. You cannot reward bad behavior and expect 100% good behavior. > The reduction was part of the PR campaign to sell the deregulation. And > yes I would support higher energy bills for cleaner, more reliable > energy enthusiastically. Well, you are unique. How much support do you think alternative energy companies would get if they told the truth about rising costs? >I would also support a _doubling_ gas prices > in order to support mass transportation and to improve infrastructure > and research into alternatives, but I suspect that I don't have a lot of > company there. You are right about being in the minority. SUVs exist because people didn't want the governments fleet mileage requirements to apply to them. Its interesting, though, that brin-l tends to support higher gasoline prices. I support high taxes on gasoline too. So does JDG. But, most people scream when gas prices rise 10%, they won't support higher taxes. Dan M. > If things had been done right, Pete Wilson and his handpicked PUC > wouldn't have pushed deregulation so quickly and so foolishly, and the > industry would have used some foresight in their dealings with the > state. But "Republican leadership" and "Corporate responsibility" are > oxymorons, and we should know that by now so shame on us. > > Doug > > _______________________________________________ > http://www.mccmedia.com/mailman/listinfo/brin-l _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
