Published March 21, 2001
California energy crisis is being blamed as the culprit of a botched electricity deregulation scheme. A chain reaction of electrical energy shortages and huge price increases are coming our way too.
The Federal Energy Regulatory Commission finalized deregulation for natural gas in 1992, and power in 1996. Electricity for mass distribution cannot be stored, but maybe someday.
California legislators, in the absence of new power plant construction, recently passed an emergency $10,000M bond that permits the state to buy energy to stabilize their market. The legislation also reverses the big promise of deregulation: competition.
The non-polluting energy advocates of the green industry regard this as an extreme expense in the wrong place. Instead they’d rather it be spent for solar, wind power advancements and other alternatives.
Renewable power proponents believed, from the onset that deregulation was flawed, but legislators did it anyway. Electrical generation prices using coal, oil and nuclear, were artificially suppressed while costs rose and additional power production plants were ignored or unpopular—”not in my backyard.”
Green Mountain Energy and Utility.com invested in renewable energy generators like windmill farms and large solar-panel assemblies. But less than 1%, of the 8.5 million California households authorized to switch providers ever did.
Alternative electrical power generation methods are becoming politically correct. Electrical power generation from biomass, fuel cells or hydrogen will be more costly, but existing methods of production will be far greater. Government’s shift from protecting existing production while encouraging competition is an uncertain mix.
Last fall energy wholesalers like Enron and Calpine drastically raised prices from 6¢ per kilowatt-hour of electricity to a peak of $1.50/kwh, responding to increased demand. Passing these enormous increases to customers hasn’t been entirely possible, resulting in layoffs and foreclosures for many. Creditors of Southern California Edison and Pacific Gas & Electric are holding their breath at the serious possibility that both may go bankrupt, which would be the largest and third largest, respectively, in US history.
“The whole situation is tragic,” says Kirk Brown of San Francisco Center for Resource Solutions. “A state which claims a strong environmental record has lost a good thing. There is no green market now. Consumers can only buy power from major utilities.”
Technology businesses—such as electronic instruments, networking and storage— seem to ride through this situation more favorably than manufacturing or others in power-critical reliances. However, very few new Internet hubs are going online along the west coast for lack of power necessary to light-up the fiber optic cables.
Center for Energy & Climate Solutions, September 2000, reported that the electricity demand per year was greater before the Web era (1996) than since that time. By the year 2007, an estimated 1,500 million square feet of warehouse, retail and commercial office space will be unoccupied in California, thanks to the Internet and more people working at home. The savings is 53,000 million kilowatt-hours of electricity per year.
Internet publishers reduce the use of paper, and the energy to produce it, a full million tons by 2003 [source: NUA Boston Consulting Group]. The cost to produce paper magazines is $686 per thousand but a mere $5 per thousand for email and online newsletters [source: CNet].
Fifteen miles east of San Francisco, near Pleasanton, CA, RealEnergy is constructing a distributed generating facility called Power Park. There they intend to gradually phase into producing electricity for local retail customers and the excess sold back into the electric grid. The present high wholesale prices have enabled this home-grown alternative-energy model to be tested in the wake of perpetual rolling blackouts. The country will be watching with interest the progress at Pleasanton.
Phase I of the Power Park project, completion by June this year, will combine solar arrays manufactured by AstroPower and BP Solar using the Capstone micro-turbines. These should generate 600 kilowatts or about half the needs of the park’s three tenants: an electronics manufacturer, an industrial parts distributor and a biotech research facility.
Phase II, completed by January 2002, will experiment with newer processes such as fuel cells, a 400-kilowatt internal combustion engine and hydrogen reformers intended to store solar electricity to a thermal electric unit made by Duke Energy. This latter futuristic devise can power engines, heat water and be placed in absorption coolers for air conditioning.
The planned last phase of Power Park, by January 2003, will employ Xonon turbines which use national gas and a chemical reaction to produce power and no polluting emissions. The projected total cost of this one facility is $30M.
If the state legislature’s emergency funding for purchase of electrical power were to be applied to regional plants like Power Park, more than 330 such localized micro-generating facilities could be built, greatly relieving if not solving the power crisis in California.