THE SANDBOX
Great American Conversations
With The Alumni of RHS
Issue 123 ~ February 11, 2001
"It isn't pollution that's harming the environment.
It's the impurities in our air and water that are doing
it."
~ Dan Quayle ~
Subjects and Contributors for Issue 123:
Deregulation and Rolling Blackouts ~ Geoffrey Rothwell (1971)
Judicial Activism in Election 2000 ~ Jim Vache (64)
Reality Check ~ Mary Ray (61)
Bomber History ~ John Adkins "62"
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Subj: Deregulation and Rolling Blackouts
From: Geoffrey Rothwell (1971)
Department of Economics, Stanford University
rothwell@Stanford.EDU
Stanford, CA 94305
In response to "Rolling Blackouts- Could It Happen Here?"
From: Sandra Genoway ('62)
"Rolling Blackouts" are a function of deregulation in
California, not primarily the lack of electricity in
California or in the West. The California Legislature
passed deregulation in 1996 to begin with the opening of a
power market in 1998. This legislation required the
privately owned utilities (the so-called "publicly owned
utilities) to divest themselves of the generation assets,
primarily fossil-fired assets. The utilities agreed to
this if the State would make up the difference between the
book value of the assets and the price they would receive
for their assets (so-called "stranded assets"). These
stranded assets were capitalized and charged to the
customers of these utilities through "transition charges."
Further, the utilities were required to freeze rates at
10% below 1996 levels until the transition charges were
paid either before or by 2002.
San Diego Gas & Electric was able to collect these fees by
last year, so when the price of natural gas doubled,
increasing the price of electricity, they were able to
increase rates to their customers. However, Pacific Gas &
Electric and Southern California Edison are still
recovering their transition fees, so cannot increase rates
to cover the increased cost of buying the electricity to
meet demand. It has been estimated that they have been
losing on the order of $1 million per hour! This has
forced them to borrow to buy electricity that customers
aren't paying for, decreasing the ratings on their bonds
to junk status. Each has now borrowed on the order of $8
billion and each is facing bankruptcy. This has lead out-
of-state regulated and deregulated generators to cut back
sales to these utilities, because they are afraid that if
bankruptcy is declared they will not be paid. This, with
the lack of in-state hydro resources, has lead to the lack
of supply to meet demand, hence the "rolling blackouts."
Generators have been unwilling to build in California
during the last decade due to uncertainty of the
deregulated power markets. Further, many Californians are
not willing to live next to a power plant (would you be
willing to?) and each proposed location has just enough
vocal neighbors to stop licensing and construction.
However, as soon as the transition period comes to an end,
i.e., 2002, electricity rates with raise with the price of
natural gas and customers will be less likely to oppose
power plants in their back yards. Until then, those of us
that live in California and buy our electricity from PGE
or SCalEd never know when we will be rolling in a
blackout. Stay tuned.
-Geoffrey Rothwell (1971)
(Note: My book on this topic will be available later this
year from IEEE Press. If you would like a CD-ROM (PDF)
version of it, please send $3 for reproduction and postage
to me at Department of Economics, Stanford University,
Stanford, CA 94305.)
~~~~
Subj: Judicial Activism in Election 2000
From: Jim Vache (64)
jvache@lawschool.gonzaga.edu
I invite all of you who are glad that the Supreme Court
decided the election to carefully read the opinons and
speculate about the significance of the judicial activism
of the heretofore typically judicial restraint oriented
plurality. There is an attempt by them to limit the law to
the facts before the court, but that is pretty
disingenuous, IMHO.
--Regards, go bombers, jim v '64
~~~
Subj: Reality Check: Electricity and The Environment:
From: Mary Ray Henslee (61) ~ Mah@satx.net
Did the ardent environmentalists in California really
think that they could have it both ways? Maybe they will
finally see the light now that the lights have been turned
out. God with all of his wisdom gave us the ingenuity to
survive and prosper and a planet with the resources that
we need to survive and prosper. I don't think that this
planet is just here to gaze upon as Clinton and Gore would
have it. The EPA became overzealous under the Clinton
administration, making it especially difficult to cost
effectively plan for growing energy needs of any kind. Any
form of energy requires some intrusion into the
environment, which should be accepted as ultimately
necessary to survive. We need water, food, and energy to
survive. They are all intertwined in some way, as we are
about to see if the situation in California gets any
worse. It is obviously not possible to be a consumerist
and an environmentalist at the same time without affecting
the balance between supply and demand. Maybe someday
technology will make it possible to completely eliminate
pollution at a price that is not prohibitive, but in the
meantime compromises must be made in order to cope with
our ever growing needs. Unfortunately, compromise is not
something that those who label themselves
environmentalists seem willing to do and instead would
rather turn saving the environment into a moralistic issue
by exhibiting a holier than thou attitude. I personally
find nothing morally right about what is going on in
California or the deliberate creation of shortages in
heating fuel that have forced people all over the country
to choose between buying food and paying for their heating
bills this winter.
The crisis in California has the potential of adversely
affecting many lives outside of the California area as
well. Nevada gets 90% of its gasoline from California, so
it will be facing gasoline shortages right along with
California if electricity can't keep the gasoline flowing
through the pipelines, as will other dependent states.
California is the home of many large Tech Companies on the
NASDAG. It was reported that Sun Microsystems would lose
$1M for every hour without electricity. That could really
cut into the company's profits and investor's holdings. It
is beyond my comprehension why the people of California
have allowed highly charged environmentalists to stifle
progress with their unrealistic feel good policies instead
of pushing for the development of responsible energy
policies to avert an electrical crisis.
The Internet makes it easy to let your voice be heard by
political leaders. I think that our new President will be
a little more realistic when it comes to government
regulations, but unfortunately many Congressmen and
Senators may not fall into line without hearing from their
constituents. Let them know that your vote depends on
their involvement in developing an energy policy that will
be adequate enough to prevent shortages and high costs to
consumers in the future.
-Mary Ray Henslee (61)
~~~
Subj: Bomber History
From: John Adkins "62" ~ ml_adkins@email.msn.com
I have a "Letter to the Editor" written by E.R. "Joe"
Barker in February 1955. I won't quote the whole thing,
but in part he say's " . . . The original idea of the word
"Bombers" was the atom bomb, not an airplane as it is now
used. . . ." Joe Barker was a coach - vice-principle -
then principle at Col-High -beginning in 1945 (45-46
school year) and leaving at the end of the 1946-48 school
year. My question is what do you think he means by "...not
an airplane as it is now used."
--John Adkins "62"
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That concludes this issue of THE SANDBOX folks. Please
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Shippenville, PA
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~123~