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The Winter of Our Disconnect

ENERGY AND THE MAKING OF MODERN CALIFORNIA; By James C. Williams; University of Akron Press: 465 pp., $49.95, $24.95 paper

THE NATURAL GAS MARKET Sixty Years of Regulation and Deregulation; By Paul W. MacAvoy; Yale University Press: 140 pp., $35

April 01, 2001|D.J. WALDIE | D.J. Waldie is the author of "Holy Land: A Suburban Memoir." His forthcoming book, in collaboration with photographer Marissa Roth, is "Real City.'

Could we have foreseen the winter of our disconnect? Could we have predicted January's blackouts and this summer's promise of more to come or counted in advance the windfall billions collected by Sun Belt power suppliers with shiny, abstract names like Enron and Dynegy or the millions more owed them by California's near-bankrupt utilities with their plodding 19th-century gas-and-electric names?

The short answer is yes. We should have seen the darkness coming. We saw, instead, the brightness of our beliefs about this golden place. We had mistaken California for a continent-nearly a universe-from which everything we wanted would come endlessly because we expected it to. California at the beginning of 2000 was turning raw aspiration into profit as quickly as post-Civil War America had and with nearly the same confident mixture of technological bravura and financial cunning. In blacked-out, deregulated January, after the briefest of gilded ages, we found that California really is an island on the land, just as its most perceptive observers had said it was, and that California's energy resources are as fragile and limited as any island's.

We would have been better served if, in our haste, we had paused to read two timely books on the history of power and its regulation. While they do not foreshadow California's current electrical mess, they throw some historical light on why we're in the dark.

In "The Natural Gas Market: Sixty Years of Regulation and Deregulation" by Paul W. MacAvoy, the problem is the inadequacy of the regulatory models that states and federal agencies have applied to natural gas production and distribution since the 1930s. None, MacAvoy says, made natural gas plentiful, cheap and profitable all at the same time, and no one-producers, pipeline operators, retailers or consumers-has benefited from the failed attempts. The current natural gas shortage, driving up household bills and the operating costs of California's gas-fueled electricity plants, is the result, MacAvoy would argue, of regulatory approaches that can't work.

MacAvoy believes a rational market could be made for natural gas through complete deregulation, except for the irrationality of consumers. They don't see natural gas as a substance-less commodity, to be priced and delivered by the workings of the market forces that interest MacAvoy, a professor at Yale's School of Management. Consumers see gas-and electricity-as something real, like sunlight or air, that flows predictably from a "second nature" of pipelines and transmission towers. The presence in the landscape of these grids-like the grids of aqueducts and highways-is so necessary and expected that ordinary nature is unimaginable without them. Californians have superimposed a man-made "second nature" of energy production and distribution on the state's unforgiving landscapes too, but our unique problem is a Gold Rush mythology of abundance. Limitless power is part of the myth, beginning with the belief in the 1860s and 1870s that California's hills, having yielded gold for the taking, would yield coal just as abundantly to power the state's transition to an industrial economy. California had plenty of gold, it turned out, but almost no coal.

Nor could the state produce enough firewood where people needed it or kerosene to fuel its lamps or manpower to till its fields. Wood, coal, kerosene and labor were "power crises" in the 19th century that were ultimately resolved by technical innovation, resource substitution and historically higher energy costs for California consumers. In the 20th century, new believers preached that the Sierra Nevada foothills would flow with endless hydropower to keep city lights shining, that more oil fields were ready to be discovered to fuel the state's power plants and that nuclear technology would make electricity too cheap to meter. It hardly mattered that there was no foundation for these beliefs either.

Our resilient faith in a "second nature" of power that is adequate to the myth of California gives James C. Williams' "Energy and the Making of Modern California" its poignancy. Williams, whose book was published in hardcover in 1997, does not forecast the "deregulation crisis" of 2001, but he might have. Speaking of Americans generally, Williams says: "They have believed each new energy resource to be without fault, to be infinitely abundant, and, therefore, to have the potential to effect utopian societal change. Moreover, people's faith in an energy resource seems to persist until ... its shortcomings are obvious, and only then do they see it cannot bring utopia. Yet the failure of a resource to live up to their expectations has not seemed to dampen their enthusiasm, as they simply transfer the myth from a fallen energy resource to the next resource appropriated for use." In 1996, the California Legislature simply substituted a deregulated electricity marketplace as the next energy resource expected to work on utopian principles.

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