[33803] in North American Network Operators' Group
RE: [OT]: Involuntary outages may start at 7am PST
daemon@ATHENA.MIT.EDU (Kavi, Prabhu)
Wed Jan 24 13:33:56 2001
Message-ID: <6B190B34070BD411ACA000B0D0214E563D34CC@newman.tenornet.com>
From: "Kavi, Prabhu" <prabhu_kavi@tenornetworks.com>
To: "'Kevin Oberman'" <oberman@es.net>
Cc: Nathan Stratton <nathan@robotics.net>,
Sean Donelan <sean@donelan.com>, nanog@merit.edu
Date: Wed, 24 Jan 2001 13:25:43 -0500
MIME-Version: 1.0
Content-Type: text/plain;
charset="iso-8859-1"
Errors-To: owner-nanog-outgoing@merit.edu
Quoting from the 1/22/01 online issue of US News & World Report:
"Ironically, California's nightmare stems in part from the state's efforts
to lower rates. In 1996, both houses of the state legislature voted
unanimously to deregulate the market for wholesale electricity, enabling
power producers to sell electricity to utilities on the spot market. But the
new law failed to create a free retail market-in most cases, rates for
consumers and businesses were fixed until at least April 2002. ...
No major power plant has been built in California for more than a
decade, partly because of environmental restrictions."
And in the 1/29/01 online issue:
"... In California, however, utilities were forbidden to enter into
long-term supply contracts and were forced immediately to buy energy
in the volatile wholesale spot market."
So tell me, how could PG&E have accurately forecasted the booming
demand for power back in 1996 and protected themselves, given no
new plants were being built?
Prabhu
> -----Original Message-----
> From: Kevin Oberman [mailto:oberman@es.net]
> Sent: Wednesday, January 24, 2001 1:04 PM
> To: Kavi, Prabhu
> Cc: Nathan Stratton; Sean Donelan; nanog@merit.edu
> Subject: Re: [OT]: Involuntary outages may start at 7am PST
>
>
> > From: "Kavi, Prabhu" <prabhu_kavi@tenornetworks.com>
> > Date: Wed, 24 Jan 2001 11:06:07 -0500
> > Sender: owner-nanog@merit.edu
> >
> >
> > Uh, PG&E does buy power at the market. They are simply
> > not allowed to sell power at the market price, which is
> > the root cause of the problem.
> >
> > Deregulation tends to work when both sides are fully
> > deregulated (buying and selling). Crimping the
> > creation of new power plants and being forced to sell
> > essentially unlimited amounts of power at a nearly
> > fixed price caused this mess. Blame the environmentalists
> > and politicians, not PG&E.
>
> No, blame PG&E (and So. Cal. Edison), at least in part.
>
> PG&E made a bet that energy prices would not increase dramatically
> before 2002. PG&E proposed the price freeze with the notion that
> competition among suppliers would bring down prices and they would
> continue to sell at the old rates, raking in excellent profits.
>
> PG&E lost, big time, when the poorly designed electrical market in the
> western states ended up charging massively increased prices which PG&E
> and they were locked into their freeze commitment.
>
> Once again, the freeze was proposed by PG&E. They made their bed.
>
> It is, of course, vastly more complicated than this. The deal also
> included bonds to pay off existing capital debts and a requirement
> that PG&E get out of the power generation business. (PG&E proposed
> these, too.) At the time it looked like a super-sweetheart deal for
> the power companies. Time has shown otherwise. But they knew what they
> were doing and they lost.
>
> Speaking only for myself,
>
> R. Kevin Oberman, Network Engineer
> E-mail: oberman@home.com Phone: +1 510 486-8634
>
