By Tom Elias
The only time California ceded control of its power supply to out-of-state interests, it produced utter disaster: an electricity crunch that saw blackouts and brownouts proliferate in 2000 and 2001, while the fortunes and reputations of every politician involved nosedived.
A very similar, repeat disaster is what Gov. Jerry Brown risked this fall, pushing a last-minute legislative bill aiming to put California’s electric grid under the control of a Western regional agency. The new outfit could have been controlled either by five much smaller states or by the Berkshire Hathaway investment firm of Omaha-based Warren Buffett, which in recent years has bought up many Western power plants, transmission lines and moderate-sized electric utilities.
Not to worry, said Brown and his top aides. This was going to be hunky dory. “The goal of regionalizing the grid,” Brown press secretary Evan Westrup told a reporter, “is to lower consumer costs and greenhouse gas emissions and improve electricity reliability and renewable energy.” It’s been hashed out for years, he said, even though the plan was pushed with minimum legal notice during the 2017 Legislative session’s final week.
In short, the Brown folks said, “Trust us.” It’s a good thing not many Californians did.
The last time Californians took the word of their governor on something like this came in 1998, when then-Gov. Pete Wilson claimed virtually all power customers would save money and enjoy more reliability if electricity were deregulated and out-of-state companies allowed to buy up landmark power plants. These belonged for decades to California utilities like Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric.
The utilities loved deregulation, just like they do Brown’s regional grid idea: Back then, their plants were too old to be counted any longer among capital investments on which their rates and profits are largely based. Instead of nothing, they suddenly could get big money by selling most of these.
So California deregulated, and the new owners of generating plants here began selling some power out of state. It was quickly turned around at highly inflated prices and sent back to California in largely-bogus paper transactions that raised prices and created shortages without moving a single electron.
The same sort of manipulation was possible under the new Brown plan, carried in the Legislature by Democratic Assemblyman Chris Holden of Pasadena.
Look out: This plan will probably be back next year.
The idea is to sell surplus California solar energy out of state, while bringing in wind power from places like Wyoming. The problem with these putative deals is that they most likely can be managed just like deregulation-era deals. Those transactions brought criminal convictions against executives of firms like Enron, the Williams Companies and others which sometimes boasted of “robbing grandma” in California. It’s a mystery why a self-styled student of history like Brown believes history can’t repeat itself. Have folks become less greedy?
Then there are California’s high environmental goals: 50 percent of the state’s power must come from renewable sources by 2030 and even more by 2050. No one knows if the planned new setup could have subverted these goals.
But the U.S. Supreme Court decreed that multi-state regional energy agreements fall under the aegis of the Federal Energy Regulatory Commission. So FERC – completely impotent during the California energy crunch and now controlled by the anti-environmentalist President Trump – could wind up managing California power and muting its emphasis on wind, solar, hydroelectric and geothermal energy, all renewable sources.
Critics worried that Wyoming, America’s No. 1 producer of carbon-rich coal, could get authority over significant amounts of energy used in California. Wyoming Gov. Matt Mead made it clear last year that he’s not concerned about California priorities.
“Wyoming has a different perspective than California does,” he told a reporter.
The last time California tinkered so significantly with its energy supply, it contributed to the destruction of Wilson’s reputation and helped lead to the recall of ex-Gov. Gray Davis, who proved unable to contend with what he termed “out of state buccaneers” bilking Californians for billions of dollars.
It remains a mystery why Brown risked a repeat, but he did and might again soon, with both him and the rest of California bailed out for now only by very loud protests.