nanog mailing list archives
RE: [OT]: Involuntary outages may start at 7am PST
From: "Kavi, Prabhu" <prabhu_kavi () tenornetworks com>
Date: Wed, 24 Jan 2001 13:25:43 -0500
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 PSTFrom: "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
Current thread:
- [OT]: Involuntary outages may start at 7am PST Kavi, Prabhu (Feb 24)
- Re: [OT]: Involuntary outages may start at 7am PST Kevin Oberman (Feb 24)
- <Possible follow-ups>
- RE: [OT]: Involuntary outages may start at 7am PST Matthew Kaufman (Feb 24)
- RE: [OT]: Involuntary outages may start at 7am PST Kavi, Prabhu (Feb 24)
- Re: [OT]: Involuntary outages may start at 7am PST Kevin Oberman (Feb 24)