Solving the energy crisis SFBG News | January 3, 2001 | Solving the energy crisis ON THE FRONT page of the Dec. 23 Los Angeles Times, there's a three-column picture of the head of the Los Angeles Department of Water and Power, waving triumphantly in front of a brightly illuminated DWP sign at the city's annual outdoor festival of lights. S. David Freeman is a hero, described in the Times as "L.A.'s Latest Luminary." And for good reason: there's no power shortage in L.A., no need to turn off Christmas-tree bulbs. Consumers there aren't complaining about their power bills or facing the prospect of choosing between electricity and food. The contrast with San Francisco couldn't be more striking. No newspaper in San Francisco is going to put the head of the city's department of water and power in a triumphant photo on the front page. There's nothing to celebrate here: San Francisco officials for more than 80 years have allowed Pacific Gas and Electric Company to steal the electricity from the city's Hetch Hetchy hydroelectric dam, to keep cheap public power out of town, and to allow the citizens to be held in the yoke of a private power monopoly. The difference between San Francisco, where residents and businesses are facing steep rate hikes and the prospect of more and more blackouts, and L.A., where they're lighting up the hillsides with abundant, cheap power, is one of the key lessons of California's worsening energy crisis. And it offers the only real long-term answer for the city and the state. • • • Public power has always been cheaper than private power, and the residents of cities like L.A. (and, locally, Palo Alto, Alameda, and Santa Clara) have always had lower electric bills. Now the difference between private and public power has become more dramatic than ever. In a deregulated marketplace, private power rates are soaring, and the utilities are demanding even more. A recent lawsuit charges the state's largest power companies (including PG) with colluding to form a cartel that is holding back supplies to drive prices artificially high. And PG, which claims it desperately needs another bailout to avoid bankruptcy, is actually making record profits. Meanwhile, Gov. Gray Davis has made an emergency trip to Washington, D.C., to seek help. He met by speakerphone with consumer activists back home and plans to announce a detailed energy policy Jan. 8. Davis seems reluctant to make any major policy changes, particularly any changes that will undo the damage caused by deregulation. If Davis really wants to begin to clean up this mess, there are some simple steps he can take – and if he doesn't, the state legislature should (and San Francisco's delegation, led by state senate president pro tem John Burton, should take the lead). For starters: • Don't give PG any rate hikes or any further bailouts. With the deregulation bill, the private utility industry won a $17 billion windfall to pay for bad investments (mostly in nuclear power). Over the past two years PG has been making sizable, in some cases record, profits – and using a lot of that money to buy up power plants around the country and to get into the electricity-generating business in developing countries around the world. It's hard to believe the company is really in such desperate financial straits. Besides, as Nader points out, if PG were forced to declare bankruptcy, that wouldn't be such a horrible thing. The company would keep operating, and power flowing, while a judge sorted out the mess and oversaw a full financial audit of the company that would determine where the money really is. If a residential or small-business customer can't make payments on a PG bill, the utility has no mercy, and nobody offers a bailout: the power just goes off. Why should PG get special treatment that it won't give the rest of us? At the very least there should be no rate hike until the CPUC has finished its complete audit of PG – and held extensive public hearings on the results. • End the deregulation experiment immediately. The evidence of the past year shows without any doubt that the free market doesn't work as a system for allocating a crucial commodity such as electricity. (Robert Scheer points out in the L.A. Times Dec. 26 that the past decade of deregulation in general has been a failure; the power market is just the most obvious, and worst, example.) • Promote public power statewide and in cities and counties. Publicly owned utilities have no incentive to gouge consumers, hoard power, or set rates artificially high – and everything they do is subject to public oversight and scrutiny. There's no reason why the state of California can't ultimately take over much of the power grid (although that would involve a massive, lengthy legal battle). In the meantime, the governor and the legislature can remove some of the obstacles to creating new municipal utility districts in local communities: for example, reducing the number of signatures required to place a MUD on the ballot and eliminating the power of local agency formation commissions to kill MUD efforts. • Promote conservation, not construction. It's far cheaper, and more environmentally sound, to reduce power demand than it is to build new plants. No new plants should be built until the state has demonstrated that simple, cheap conservation programs can't meet all the demand. Meanwhile, since Davis and the legislators have long bowed to the will of the private utilities, the city of San Francisco needs to be moving on every front to address the energy crisis. If you're angry about your PG bill, demand that the supervisors and the mayor do the following: • Move forward with the MUD, which will bring the city its own cheap public power (see "The Green Choice [http://www.sfbg.com/News/34/36/mud.html] ," 6/7/00). • Direct the city's Sacramento lobbyist to oppose any further bailouts and demand that the city's delegation in Sacramento support efforts to expand public power locally and statewide. Given San Francisco's historic Raker Act mandate, the city should take the lead here. The supervisors should immediately pass a resolution calling on the governor and the legislature to establish a real state public power authority and to remove all obstacles to local MUDs. • Conduct a complete investigation and financial audit of where the city's Hetch Hetchy power goes. Thanks to disastrous sellout contracts signed in 1988 (see In This Issue [http://www.sfbg.com/News/35/13/13inthis.html] , 12/27/00), Hetch Hetchy is actually losing money on its power sales these days. But there's no good accounting for how much of the power is lost, diverted, or stolen when it enters PG's grid at Newark. • Provide help and advice for people facing huge PG rate hikes and create an ombudsperson to help citizens fight high bills and avoid shutoffs. • Hire an experienced, committed pro-public power general manager for the city's Public Utilities Commission. It's ridiculous that San Francisco, the only city in the nation required by federal law to operate a public power system, can't even get a PUC director who supports and promotes the idea. Maybe S. David Freeman's looking for a new challenge. P.S. On Dec. 29 the San Francisco Local Agency Formation Commission voted 3-0 to reject an attempt by a PG front group to block the MUD from going to the ballot. Sup. Sue Bierman, at the end of a distinguished career on the board, was among those voting to clear the way for public power in San Francisco. You can send email asking that there be no rate increase to public.advisor@cpuc.ca.gov [public.advisor@cpuc.ca.gov] P.P.S. For an analysis of the crisis by energy expert Dan Berman, go to sfbg.com/News/35/14/Berman.html [http://www.sfbg.com/News/35/14/Berman.html] . [http://www.sfbg.com/searchit.html]