Can the Last Person Leaving California…

…please turn off the lights…oh wait, with decisions like this the lights will probably already be off. For those of you not living in California, particularly Southern California, San Onofre Nuclear Generating Station (SONGS) provides (IIRC) 2,150 MW to Southern California. The steam generators are going to need to be replaced by 2009. Without the money to do it, Southern California Edison may very well shut down the plant.

Now that doesn’t sound that awful, but lets recall California has pretty much ruled out coal fired generation plants. This new ruling and the fact that California has been traditionally hostile to electricity generation via nuclear power, and the only viable source of electricity. The problem is that California’s energy needs are growing and renewables such as solar, wind, geothermal and biomass just aren’t ready to produce the kind of electricity we are talking about.

Further, with increased demand for natural gas, it is likely that the price of natural gas is going to remain high and go even higher. Thus, California is going to see electricity rates rise for the foreseeable future, and California already has pretty darned high electricity rates. Now, one might think, well it can’t be that bad. But it can. With the last crisis the CPUC decided to hit large industrial customers and large residential customers (which is probably highly correlated with wealth) the hardest. In some cases, it wasn’t unheard of to watch some people’s bills go well into several hundred dollars over the course of one month. Add on the high heating bills (yes, California has pretty mild weather, but is can still get chilly during the winter months), and more and more people and businesses might decide to look for greener pastures.

Personally, while fewer people on the freeways is an appealing notion, the idea of fewer businesses is not all that good. Especially for a state saddled with a huge and bloated budget, no interest in cutting the pork out of spending, and that generally it not seen as a good thing to be driving businesses from your state. I tell ya, with state officials like the one’s California is stuck with, who needs enemies? If Osama bin Laden was thinking of staging a terrorist attack on California, I’d say, “No, look for a better target, we seem to be shooting ourselves just fine, thank you very much.”

Oh, and if you think your okay because you live in Nevada, Idaho, or New Mexico, bad news: California will try to find a way of satisfying the demand in the state. If you have independent power producers in your state, you might soon find they are sending their electricity to California to capitalize on the high prices. This in turn could cause problems with electricity prices in your state.

FILED UNDER: Economics and Business, , , , ,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. Mateo says:

    So, Steve, I take your fact-free rants to mean that you don’t intend to move to California … gosh, wish I could say we’d miss you, but I suppose the other 15 million people who plan to move here in the next decade will have to fill your formidable shoes… and I see you’re having a hard time convincing even Virginians that Republicans have the first clue about, um, well, anything. Good luck with that, let me know how it works out.

    California doesn’t need any more coal power, and those nukes you mentioned are the reason our power prices are so high. Only a foaming-at-the-mouth government pork-project contractor believes in nuclear power anymore – Wait, let me guess – you work in Arlington for one of those over-priced DoD “consultants” who gets paid millions of my dollars to research toilet seats? No? You do surveys on whether it’s better to have VHS or Beta machines in the lounge at AEI? Help me out here, Steve.

    Wind power can’t do it, huh? So I guess I can keep all the profits from the wind farms I’m investing in to myself … fastest growing source of energy on earth, and cheaper than your super-duper coal plants. Don’t know why you’d care to know that, but again it doesn’t matter, enjoy choking on TVA’s coal plant pollution, and sorry that Virginia will be Democratic in ’08. Can’t say you didn’t ask for it.

  2. cirby says:

    Wind power can’t do it, huh? So I guess I can keep all the profits from the wind farms I’m investing in to myself … fastest growing source of energy on earth, and cheaper than your super-duper coal plants.

    Not really. The current (and projected) cost for wind is about two cents per kilowatt-hour, and incurs a lot more losses in transmission, since you can’t put wind power plants just anywhere (lack of wind, or lack of land that’s suitable to put the windmills on). Meanwhile, coal costs less than a penny per kWh, and the plants can be put in many more places.

    “Fastest growing” is a really dishonest metric, since there’s so little wind power in use that it’s going to take decades at current growth rates before wind power could become significant.

    There’s also the “base load” problem, which is why you need coal and nuclear power in most of the country. Base power needs to be available 24/7, and can’t be affected by things like, oh, the wind deciding not to blow (or blowing too hard).

    By the way – that profit you’re making off of wind power wouldn’t even exist if it weren’t for subsidies.

  3. odograph says:

    California is about as dysfunctional as the federal government. Who knows what’s going on? It is at least as likely that the power companies are gaming us again, by excluding some sources, as that “environmentalists” are in control.

    That’s actually a laugh, in 2005, isn’t it? That environmentalists are actually running things?

    Anyway, the real kicker is that most home users could probably cut their electric bill in half, with minimal effort. I’m actually down to $15 a month. Do yourself a favor, buy a “kill-a-watt” monitor, and see where your electricty is going.

  4. LJD says:

    The problem with the wind turbines is that they kill so many endangereed birds.
    Maybe they can just live on one of those potato batteries?

  5. odograph says:

    I know you whacko environmentalists want us to think that LJD, but studies show impact is low in most areas:

    http://www.currykerlinger.com/studies.htm

    (It was unfortunate that Altamont was built out before people realized its significance to raptor migration.)

  6. Barry says:

    Steve, please read Krugman on the California power situation, and come back when you have a clue.

  7. LJD says:

    …and then there’s the destruction of hillside viewsheds…

    Nope. Definitiely need to start making candles from organic ingredients… Kill your television… Start planting potatoes…

  8. odograph says:

    I’ve actually got a 32″ flat screen TV, included in with that $15 electric bill. Of course I chose the LCD and not the plasma.

  9. Steve Verdon says:

    Mateo,

    I live in CA. Geez, I thought that was obvious.

    California doesn’t need any more coal power, and those nukes you mentioned are the reason our power prices are so high.

    Uhhhmmm no. The reason why CA’s prices are so darned high isn’t the nuclear, but the Qualifying Facilities and the long term contracts Davis entered into in late 2000 early 2001.

    Wait, let me guess – you work in Arlington for one of those over-priced DoD “consultants” who gets paid millions of my dollars to research toilet seats? No? You do surveys on whether it’s better to have VHS or Beta machines in the lounge at AEI? Help me out here, Steve.

    Bzzzt. Johnny, tell Mateo what his lovely door prize is.

    Wind power can’t do it, huh?

    Not in the quatntities necessary for the California economy. Do you know how many gigawatt hours CA consumed last year? Tell me how many windmills you’d need for that. Here it is Mateo, crunch time: you either put up the number of windmills or everybody will know for a fact you are bullshitting.

    Steve, please read Krugman on the California power situation, and come back when you have a clue.

    I have, and it is Krugman who made the mistakes, not me. Linky

    Odograph,

    California is about as dysfunctional as the federal government.

    Sadly you are quite correct in the above.