Power On…Power Off! Power On?

Californians are facing rolling blackouts this summer. What is the real cause behind California’s energy crisis?
From the July 2001 Trumpet Print Edition

California has long embodied the spirit of the American dream. It is a special land offering great opportunity. Geographically it is the third-largest state in the nation. California has been richly blessed with a moderate climate and incredible natural resources. Its seaside location, breathtaking mountain vistas, lush green valleys and ancient forests have drawn multiple millions of tourists to this legendary land.

California is known as the Golden State, and for good reason. Historically, men have searched for, fought for and mined its most precious metal—gold. Yet, ever since the first Spanish settlement in the 18th century, agriculture has been vital to California’s bustling economy. The state virtually supplies the nation and global markets with fresh fruits and vegetables during the northern hemisphere winter. Another one of California’s most famous economic hallmarks is Silicon Valley—the seat of America’s high-technology industry.

One seventh of all U.S. exports come out of California. The state is a major economic player in the Pacific Rim. If California were a nation, it would have the world’s sixth-largest economy. California is the locomotive driving the economies of both the United States and Asia.

As California goes, so goes the nation—and Asia. This is why we should maintain a close watch on California’s threatening woes.

The Cursed State

Over the last decade, the Golden State has suffered a string of curses of biblical proportions, including earthquakes, floods, drought and wildfires. In 1992 there was much publicity about the severe “five-year drought” that had been plaguing the Sacramento water basin. That drought is essentially not over! June 15, the U.S. agriculture secretary announced that seven counties in northern California qualify for federal drought aid. Wildfires have already begun for the summer months in California.

Now added to California’s natural disasters is the threat of rolling electric power blackouts. Much publicized in March, dire forecasts about this summer’s power crisis were given to California residents. Let’s discuss a few of the warnings given by news reports.

Dark Predictions

Since March, dark predictions concerning the blackouts have filled news headlines. Newspaper articles have warned that blackouts will severely strike California’s economy. On April 21, the San Francisco Chronicle reported that California would lose from $2 billion to $16 billion this summer. In addition, over the next three years some 15,000 jobs could be lost in the Bay area alone. This article stated that “Energy experts predict that the state will face at least 34 days of rolling blackouts this summer, when demand will rise as air conditioners are cranked up in homes, schools and work places.”

Silicon Valley businesses could be some of the hardest hit by unreliable power. The Chronicle quoted Don McIntosh, facilities director for Sunnyvale chipmaker Advanced Micro Devices: “A one-hour loss of power would be disastrous for us…. You have the potential for ruining an entire batch of [silicon] wafers. In addition, it could take up to three days to recalibrate all the tools.” The article reported that McIntosh’s company is looking for alternate sources of uninterrupted power for the summer.

Clearly, a power-on, power-off, power-on scenario will severely hurt California’s economy. On March 23, Stratfor Systems reported that a downturn in California’s economy would be nasty. “A slowdown in California will, therefore, exacerbate Asia’s downturn, most notably in those countries that rely on exports to the United States. It will also undermine U.S. exports, as the state produces nearly 30 percent of the nation’s exports to the region.” America’s economy is already lagging. The California blackouts carry the potential to make things far worse.

Besides economics, there are public health and safety issues to consider as well. On May 16, the Sacramento Bee warned California residents that water supplies would be threatened because pumps could fail during power outages. Staff writer Chris Bowman wrote, “State health authorities are notifying public water utilities to secure emergency water and backup power so fire hydrants won’t run dry and drinking water remains safe during blackouts. The notice, which is being issued this week to all 8,700 public water systems in the state, also advises utilities to warn the public that tap water could turn cloudy or [become] contaminated during a prolonged power outage at the utilities’ well pumps.”

The threat to California’s water system is a serious one. All effective urban water systems require constant pressure to keep water clean and flowing. Since many water systems have cracks in pipelines, a lack of water flow allows for back seepage, which leads to contamination. If pumps do not operate continually, even raw sewage can be sucked back into water supplies. This represents a real public-health hazard. Rolling power blackouts will force California residents to boil water before use. This health problem could become more than just a matter of inconvenience.

Even worse is the loss of water at fire hydrants, considering California’s problems with wildfires. In addition, a loss of electrical power at the water pump will adversely affect agricultural communities already suffering from drought. It takes electrical power to move irrigation water.

There are other public safety issues accompanying blackouts. When traffic lights go out, accidents happen. Traffic jams increase and most assuredly tempers will flare. People will be trapped in elevators. The elderly and very young will suffer from the heat; some elderly could die from heat exposure.

Complex Crisis

California’s electric power problems need some quick solutions. Unfortunately it appears that at this point there is  more finger pointing than constructive meetings taking place. Can the right solutions be found and implemented? A recent Gallup poll shows that 68 percent of Californians see their energy situation as very serious. While most of the country is concerned about the higher costs of gasoline and natural gas, Californians are concerned if they will have power at all. The mood in California is very negative. In fact, most Californians feel they will get stuck with both darkness and higher utility costs. Higher electric rates will represent a loss of income. A very serious social situation is brewing in California.

California’s energy crisis is complex. Few truly understand what is actually taking place.

Some feel that liberal news media have misrepresented what is truly happening in California. We must remember that shocking headlines sell newspapers, but don’t necessarily give real understanding of the facts. Many reporters, through a lack of research combined with the desire to scoop a story, have communicated glaring errors. Since March, news stories have discussed various causes for California’s electric power crisis: lack of power plants, rapid growth in population, skyrocketing demands outstripping supplies. But what actually caused the California blackouts in March 2001? Was it a lack of power supply?

Attempting to clarify the real issues in California, Brill’s Content reported this in June 2001: “But the problem in California isn’t a lack of supply. It’s that the energy producers have withheld supply from the utilities at strategic moments to protest the utilities’ failure to pay debts, as Los Angeles Times reporter Julie Tamaki pointed out in March. The Foundation for Taxpayer and Consumer Rights points out that the blackouts have hit at just the moments when the suppliers wanted to extract new concessions and subsidies from the state, such as agreements to cover the utilities’ debts to the suppliers. In total, California has 55,500 megawatts of power-generating capacity and 4,500 megawatts purchased through long-term contracts from out-of-state suppliers—approximately 15,000 megawatts more than peak demand….”

The truth is, the March blackout was manufactured so producers could drive a hard bargain with utility companies.

Bad Legislation

Other news reports have stated that California’s private utilities are bankrupt because of the state-imposed cap on the rates that utilities can charge customers. Yet Brill’s Content reports, “But the major news outlets regularly omit vital context: Legislation deregulating electricity markets passed the California legislature unanimously in 1996. It was exactly what the private utilities wanted; certainly no bill would pass the legislature unanimously if pg&e or Southern California Edison [were] opposed in whole or part. The law was a remarkably lucrative deal for the utilities. They received $28 billion in ratepayer subsidies for what the utilities call ‘stranded costs’—previous plant investments gone bad—and were allowed for the first time to invest in unrelated businesses in the United States and abroad.” In essence, reports that the private utilities are near bankruptcy do not give a true picture of reality.

Pg&e did declare bankruptcy in April. But few articles have discussed the assets of pg&e’s parent company. Pg&e is expected to have a hard time with creditors in bankruptcy court because of assets gained since 1996. Brill’s reported, “The deregulation legislation passed in 1996 allowed the utilities to restructure themselves; their newly created holding companies have extracted billions of dollars from their utility subsidiaries and used the proceeds to buy back stock, pay out huge dividends to share-holders and make out-of-state investments. The parent companies have also profited from the price increases in the wholesale electricity market, as one subsidiary (electricity generation) has sold at superinflated costs to another (utility provider).” The shocking point Brill’s is making here is that the utility companies have gouged themselves. What is playing out now in California is a war among producers, utility companies and state officials—caused by bad legislation!

The critical question is, do the key players involved really understand the high risks involved statewide, nationally and internationally?

A Political Crisis

California’s real energy crisis is political, not electrical. Yet very little has been said in the press about the role of politics in this serious crisis. Government officials and lawmakers have received little bad press. Some feel California’s liberal press is giving liberal leaders a free ride. It appears that everyone but the politicians has been held accountable for California’s energy crisis.

Most news reports have failed to show that California’s 1996 legislation is at the heart of the problem. Most assume that the bill deregulated electric rates. But in fact, electric rates were never deregulated. Brill’s states, “The 1996 California legislation was a monstrosity of price controls at the retail level and free markets at the wholesale level…. The law guaranteed the worst of all worlds—the highest possible prices from the producers and no incentive for retail consumers to shop around for the best bargain. Why should they when they were feeling no pain?”

In other words, the 1996 legislation ensured that retail consumers would pay less than true market value for their electricity, while at the same time allowing electrical producers to artificially inflate the prices for utility companies. While the utility companies shouldered the burden of higher prices, consumers have not. The effect has been a financial crisis for the utility companies. And now this mess is being handed back to state leaders, who, to be blunt, created it all in the first place.

Is it possible for California state officials to solve this crisis? So far their track record is not good!

The Trumpet does not desire to oversimplify California’s energy crisis or to take sides. Utility companies’ debts should be paid off. However, energy producers should also be prevented from artificially overcharging. Consumers should pay the true market value for the electricity used. No one should be gouged!

Does California need more power plants? Of course—a growing economy needs more energy to sustain growth. Some blame environmentalists for holding up the construction of new electricity plants in the state. But did you realize that in fact 11 new plants have been licensed and six are under construction in California?

Do Californians need to conserve power? Yes, they do—as do all Americans. All states should be developing energy plans that emphasize energy efficiency and renewable energy. Do Californians need to protect their environment? The answer is a resounding yes! But to truly solve its energy crisis, California will need tough, forward-thinking leaders who can make right decisions, no matter how unpopular. Unfortunately, most politicians, lawmakers and leaders are motivated by greed or the need for votes rather than by the conviction for doing the right thing.

California’s energy crisis is just another example of mankind’s proven inability to govern the needs and welfare of other men.

Bible prophecy shows that the United States and Britain will suffer severe economic woes as a punishment for our sins. California’s energy crisis is a sign of poor leadership and the simultaneous withdrawal of God’s blessing on this country. It is doubtful that California will be able to solve this crisis in the immediate future.

Yet, there is good news on the horizon. Jesus Christ will soon return to restore God’s government to this Earth. That government will serve the needs of others and finally solve the social and economic problems so prevalent at this time.

In the meantime, stay close to the Trumpet magazine—your only source for true understanding about today’s current news.