Posted on Fri, Jul. 21, 2006
Little risk to Schwarzenegger of blackouts, thanks to Gray Davis
SACRAMENTO - Despite a
midsummer heat wave that has pushed energy use to an all-time high this
week, experts say Gov. Arnold Schwarzenegger probably does not have to
fear the blackouts that ended former Gov. Gray Davis' political career.
And he has Davis to thank for that.
long-term contracts Davis signed, at great political cost, guarantee
plentiful energy for the next few years at what now look like good
"In an interesting twist of fate, he's benefiting from the
decisions that his predecessor suffered for," said Frank Wolak, a
Stanford economist who specializes in energy. "The terrible contracts"
Davis "signed at the height of the crisis are now quite reasonable."
Davis was recalled from office in 2003 and replaced by Schwarzenegger, in large part because of the energy crisis.
Democratic opponent, state Treasurer Phil Angelides, has tried to
capitalize on fears of a new wave of blackouts as temperatures climbed.
This week, he warned of "a new energy crisis" and blamed Schwarzenegger
for failing to build enough power plants.
But energy experts say
although population and job growth have pushed the system up near its
capacity, today's situation is nothing like the energy crisis of 2000
The blackouts occurred largely because of market
manipulation. With utilities dependent on the spot market, energy
companies such as Enron withheld supply to drive up prices.
But with utilities now buying power under long-term contracts, there is little danger of a repeat.
while it is true that fewer plants have been built under Schwarzenegger
than while Davis was governor, the California Independent System
Operator, which manages the state's power grid, said the state has
adequate power supply, even during heat waves like the current one. The
high temperatures are forecast to last at least the beginning of next
On Monday, the state shattered its previous energy consumption
record, peaking at 46,501 megawatts. But the system did not falter, and
Cal ISO did not have to trigger voluntary rationing by businesses.
does not mean the state could not face problems in the future. Experts
say California could face blackouts if the electricity supply fails to
keep pace with rising demand or if utilities do not negotiate new
long-term contracts as the old ones expire in the next few years.
Sen. Joe Dunn, D-Santa Ana, said if a 100-year heat wave were to hit,
the state would be vulnerable to blackouts because it does not have
enough reserve power. That requires utilities to generate excess power,
costing them money.
A 20 percent reserve, he said, "is very costly. But the problem is, 10 percent is not adequate for a 100-year heat wave."
says Schwarzenegger is not preparing for the future because he has not
encouraged as many new power plants to be built as Davis did. But
experts said the slowdown was the result of so many power plants being
built during the Davis administration, creating a supply glut that
reduced the economic incentive to build new ones.
Building new plants is not the only way to increase the state's energy supply, however.
California's energy use patterns, which peak on hot summer afternoons
as residential customers turn up their air conditioning, several
experts said the state would be better to encourage conservation than
build power plants that only get used a few hours a year when demand
Severin Borenstein, director of the University of
California Energy Institute, said Schwarzenegger could prod the state
Public Utilities Commission to encourage users to conserve energy by
charging them more for the power they use during peak hours. In
exchange, customers would get cheaper power during off-peak hours.
the state spent $35 million during the energy crisis on new meters that
can tell when businesses use their power each day, they have balked at
being charged on an hourly basis for energy, and the PUC has been slow
to set new rates.
Conservation has "taken a back seat to the, 'We
gotta build, build, build' mentality," Borenstein said. He said states
such as Georgia, Florida, New York and Illinois already charge
companies more for peak energy use.
A spokesman for the governor,
Darrell Ng, said Schwarzenegger supports a market-based conservation
approach but wants to do it carefully to avoid repeating the mistakes
of deregulation, which led to California's electricity crisis.
Thursday, the PUC gave Pacific Gas & Electric permission to install
new time-sensitive meters for residential users. But it will take five
years to install the meters and participation is voluntary.
meantime, California is keeping up with rising demand by applying
energy efficient building codes and better technology. Although the
state's population grows by 2 percent a year, its energy usage has
risen only 1.8 percent a year, said Claudia Chandler, assistant
executive director of the California Energy Commission.
"On a per
capita basis, California leads the nation in efficiency," she said.
"Our consumption is flat compared to 30 years ago."