San Francisco Examiner, June 21, 2001

Before long, perhaps even as I write, California communities from Crescent City to San Francisco to San Ysidro will get notice that it is their turn to have their power cut off.

Rather than simply flip the switch at random, as in the “rolling blackouts,” communities will be put on notice. That way, the reasoning goes, people are less likely to get caught in elevators and other unpleasant locations. On the other hand, the advance notice will enable criminals to take advantage of dysfunctional security systems.

Rolling blackouts versus planned blackouts does not amount to much of a choice. Californians are right to be angry because the entire crisis is a planned blackout and need not have happened. Just as during the energy crisis engineered by President Jimmy Carter, we are not “running out” of fuel in any conventional sense.

Doomsayers such as Paul Ehrlich predicted we would run out of everything from oil to flour, but failed to allow for human creativity. When we started using fiber optics for communication, the threatened copper shortage vanished.

Likewise, oil and natural gas wells are not going dry. Energy supplies are plentiful but they face more obstacles on their way to the customers who want to buy them. Some of these obstacles are political.

Politicians want to tell people that their utility rates will never rise, leaving the impression that the government is protecting them from predatory, profit-seeking corporations. This is a variation of the utopian mindset of the 1930s, in which Happy Workers would work at one place their whole life before happy retirement on a government pension.

The underlying assumption is that a group of wise politicians can plan the lives of millions, bringing in prosperity and pervasive happiness, and, of course, at little or no cost to the recipients themselves. It was the modern variation of this mindset that brought in California’s half-baked electricity deregulation plan, not even worthy of the name, which capped retail prices but saddled wholesale prices with onerous controls that have led utilities into bankruptcy.

California industries were anything but bankrupt, particularly those in high technology. The state’s economic growth pushed the demand for power up 12 percent from 1996 to 1999 alone. But this demand also faced a variation of the utopian vision.

Windmills and solar power, in this plan, we were told, would increasingly meet our needs, as opposed to the older “dirty” energy sources. Wind and solar power, unfortunately, do not come close to meeting the needs of California’s vibrant economy. But lobbying from their eager acolytes has made it difficult to site new power plants. Once sited, the plants need to be built and brought on line.

That has not happened for some time in California, where no new nuclear or coal-fired power plants have appeared for two decades, and some have even been taken off line.

Increasing demand plus utopian politics plus price controls equals a “crisis by design,” as Lawrence Makovich of Cambridge Energy Research Advisers put it. Instead of facing this squarely, politicians have opted to demonize energy suppliers. In Sacramento, the party line, adhered to with remarkable ferocity, is that the crisis is the product of greedy, Texas-based energy companies.

The chairman of one of those companies is Kenneth Lay of Enron Corp. California Attorney General Bill Lockyer recently said that “I would love to personally escort Lay to an 8-by-10 cell that he could share with a tattooed dude who says, ‘Hi my name is Spike, honey’.”

Such puerile posturing does nothing to create supply or conserve energy, but more is surely on the way. Newspapers are publishing recipes suitable for blackout conditions. Meanwhile, when the power goes off, whether a rolling or planned blackout, the victims should not blame energy suppliers but politicians who ignore the realities, supply, and demand.

Yes, under market conditions electricity rates would go up in the short term, but that would provide a much-needed incentive to conserve and more power plants to be built. That is a better outcome than deciding which communities will stumble in the dark, and trying to pass this off as leadership.

Sally Pipes is the President and CEO of the Pacific Research Institute, a California-based think tank. She can be reached via email at spipes@pacificresearch.org.