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California and the West | ON CALIFORNIA

Energy as a Second Language

February 11, 2001|PETER H. KING

Californians confounded by the energy mess might be tempted to conduct their own inquiry and read through Assembly Bill 1890, the 67-page piece of legislation that put the state on the path toward deregulation. They are cautioned, however, to bring along special tools: the chisels and hammers of hard rock miners, for starters . . . and some sort of breathing apparatus . . . and a wheelbarrow filled with periods.

The going can get pretty rough. Consider this single sentence, lifted from AB 1890--which, by the way, was so crystal clear to state lawmakers that they passed it with nary a dissenting vote. I suggest reading it aloud, in a slow, booming James Earl Jones sort of voice. Remember, no stopping until the first period is reached:

The short-run avoided cost energy payments paid to nonutility power generators by electrical corporations shall be based on the clearing price paid by the independent Power Exchange if (1) the commission has issued an order determining that the independent Power Exchange is functioning properly for the purposes of determining the short-run avoided cost energy payments to be made to nonutility power generators, and either (2) the fossil-fired generation units owned, directly or indirectly, by the public utility electrical corporation are authorized to charge market-based rates and the "going forward" costs of those units are being recovered solely through the clearing prices paid by the independent Power Exchange or from contracts with the Independent System Operator, whether those contracts are market-based or based on operating costs for particular utility-owned powerplant units and at particular times when reactive power/voltage support is not yet procurable at market-based rates at locations where it is needed, and are not being recovered directly or indirectly through any other source, or (3) the public utility electrical corporation has divested 90 percent of its gas-fired generation facilities that were operated to meet load in 1994 and 1995.

See, now, why breathing gear was recommended?

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I have read that sentence many times. I have read it forward and backward. I have read it skipping every third word. I have read it while banging on a tom-tom. In the end, every time: gibberish. This would be comic except for one point. Experts knee-deep in electric policy actually have suggested to me that buried in this 213-word sentence are important pieces of business--loopholes, catches, ground cover.

I will not attempt to relay their explanations. I do not possess the second language that is electricity and no doubt would bungle the translation. My purpose in dredging up the sentence--and similar word jungles are scattered throughout the bill--is to suggest that its impenetrable construction itself might be a clue for those seeking to understand how California became mired in the current energy mess.

The most obvious conclusion to draw is that "they"--the people who make, buy, sell and deliver energy, who write the rules, who create the policies--don't want us to understand their business. Indeed, much of the discussion of how to escape the energy fix seems to be conducted in code. They've got their QFs and their CT/VTs, their CTCs and their MCPs. They've got their block forward and bilateral contracts, their decremental price adjustments, their short-run avoided costs.

And all we have got are the questions of simpletons:

What happened?

Will the lights stay on today?

How much will we have to pay, this time, to bail out the utilities?

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Environmentalist David Roe, who 20 years ago helped make reluctant energy executives see that stringing nuclear and coal plants up and down the California coast was not in their economic best interest, compared the special language of electricity to the equally opaque ones that govern Western water policy and Manhattan real estate.

To obtain a seat at the table, and to escape from the table uneaten, it is necessary first to know the lingo. The words become a barrier of sorts, a way to keep out bothersome meddlers--which can create larger problems.

"American society," Roe said, "is never very far out of whack on things where everybody is watching. It is in the dark, dusty corners of society that things can get seriously out of whack, and public utility regulation is just a classic example. It is boring. The numbers are big, but it's in the bowels of places like the PUC, where nobody is watching, that very large mistakes can be made--not on center stage, but the dark, dusty corners."

And the special jargon, the tangle of acronyms and words, these, Roe said, "are the dust in the dark, dusty corner." And so the true meaning of the 213-word sentence? It is this: Don't even bother trying to understand what these words mean. We understand, and that ought to be enough for you. Trust us. And stay away.

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