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Fight for power: Battleground California

The power industry is one of the largest industries in America. People have become so reliant upon power that it might as well be oxygen. People rely on power for everything from cooking to food, to lighting, to getting water. Power has become a necessity in modern day America. With something so valuable to Americans, why has it become such an issue in California?

America's power companies have been fighting a war for decades with the environmental lobby. At every turn, they find the environmental lobby has fought to oppose practices that have endangered people. They have tried to build power plants on fault lines, not properly disposed of nuclear waste, spilled oil in our oceans, and helped us to maintain reliances upon them in their current form. They don't want Americans to put more into alternative energies because they do not own the patients on them and they would lose profits. Thus, they have created and planned out battleground California.

Why California? California has the largest environmental lobby for a single state. California has the 6th largest economy in the world. California's business has become increasingly reliant upon this power need. California is considered to be a democrat stronghold. All this makes California key to submission of the U.S. to power companies.

With democrats in power in California currently, this battle serves multiple purposes. First, it is intended to weaken the environmental regulations. This is important to the oil companies and their desire to drill for oil off the California coast. It also gets the power companies more room to maneuver in where they put their plants and how they manage them. It also weakens the environmental lobby where it is strongest. Second, it is intended to get higher rates out of the California residents. If they can make their argument of power costing so much to make persuasive, they can get the state to either eliminate a cap on fees or raise that cap substantially. Third, if it intended to get another bailout of the power companies, i.e. free money. In 1996, California set a dangerous precident of willingness to bailout power companies. If they can win the argument of going bankrupt in the eyes of Californians, they may get that bailout again, only 5 years later. Fourth, it is intended to make democrats look bad for not being able to deal with the problem that is vital to the people and businesses of California. This is part of the grab for more republican influence in California. If they get their way, winning in California sends a strong signal to other states that they should let the power and oil companies do as they wish to maintain power for Americans and that democrats should nto be put into office if Americans want power and economic growth.

Is there really a crisis in California? Not really. How can we say that with rolling blackouts happening, Edison and PG&E talking about filing for bankruptcy, and costs of power rising in power auctions? In California, 30% more power plants are "down" for "maintenance" at one time than at any time in state history. It is normal for power plants to have "maintenance" in the winter months due to the need for electricity for air conditioners in the summer. However, it is not normal for so many plants to go offline at the same time. Why would they all go down at the same time? Could this be an artificial power shortage? We believe so.

Why would a company run short of power intentionally? Wouldn't that hurt their business? In a free market, should a company do this with true competition, yes, it would hurt their business because someone else would come along and meet the need. However, California does not have true competition in the power industry. If the consumer decides they are not having their needs met by their power company or they don't like the pricing, they are captive and cannot change companies. They may be able to by law, however, power lines do not overlap for companies. This means that while PG&E may have the power to sell to an Edison customer, they don't have power lines to get it there unless Edison let PG&E use Edison's power lines. There is no reason to believe that Edison, or any other power company, would allow this to happen. If you are in business and you have a captive market, you are essentially a monopoly and can control prices and service. The only thing stopping that is the prices set by the state.

Republicans have been saying that the price cap must be lifted completely. They say that is the problem in California. Is it really? In a monopoly, if prices are not regulated and customers must buy the product, the only thing that checks prices are the paychecks of the consumers. That skews the supply and demand curve because there is no free choice to balance it. The power company could, without a free market or a government cap, limit the power to any house to arbitrarily low levels while raising the price to a level that makes it just barely affordable. This may be starting to occur with proposals of baseline pricing showing up in California.

This becomes detrimental for a few reasons. First, it forces spending to go to one industry causing shortage of income for spending in other industries. This could be a trade off of jobs, except that it is doubtful that more power company jobs would be created, but rather money would be put into profit coffers. Therefore, it would shrink the economy due to lack of consumer spending on other goods, causing businesses to close down. Second, it holds consumers hostage. Without power, people cannot live the lives they are accustomed to. They become third world citizens within what is called by some, "the greatest country on earth." Third, it prevents alternative market solutions. With no disposable income, people cannot afford to purchase alternative energy sources. This prevents market competition and maintains the cycle.

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