• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Home
  • About
  • Podcast
  • Archives

Atomic Insights

Atomic energy technology, politics, and perceptions from a nuclear energy insider who served as a US nuclear submarine engineer officer

Socialized Electricity

March 21, 2001 By Rod Adams

Guest Letters

By Tom McClintock
Reprinted with permission of the author

Sacramento, where bad ideas never die.

Sacramento is once again host to a variety of plans for the government takeover of California’s power system. The private sector, it is said, has done such a terrible job of providing electricity that government must now step in to save the day. Thus, the Legislature is awash in proposals to spend billions of dollars of public money to acquire existing power facilities. Fifteen billion dollars has already been authorized for this purpose, and an additional $10 billion is pending in the Senate.

Meanwhile, Gov. Davis is losing about a $1.5 billion a month day-trading in the electricity market.

The irony is that after the expenditure of as much as $25 billion for “public power,” not a single inch will have been added to the transmission lines, nor a single watt to the generating capacity of California.

The root of California’s crisis is a catastrophic shortage of electricity. In a shortage, prices rise or blackouts occur. To reduce prices and avoid blackouts, the only permanent solution is to increase the supply. Merely changing the ownership of existing facilities leaves Californians with exactly the same shortage, only billions of dollars the poorer for it. Government takeover advocates argue that at least a government power authority will protect consumers against price gouging and poor management.

Unfortunately, government power authorities don’t insulate against price gouging. The biggest price gouger in this entire crisis has been the Los Angeles Department of Water and Power, which was generating electricity for $51 per megawatt hour and selling it back to California ratepayers for as much as $1,400.

Nor does a government takeover assure better management. Just a few years ago, the LADWP was buried in $7 billion in debt. The Sacramento Municipal Utilities District was a managerial laughing stock, having squandered hundreds of millions of dollars for a nuclear plant it barely used.

“Say what you will,” the government takeover advocates reply, “when push came to shove, the municipal utility districts of California are in great shape, while the private utilities are a basket case.” But one needs to look at the reason. Ever since the state reorganized the electricity market in 1996, the municipal utility districts were allowed to trade in a free market, while the private utilities were forced to buy power exclusively in a Soviet-style power exchange where the highest bid during an hour set all prices.

The municipal utilities were able to retain their generators. Government forced the private utilities to sell theirs.

The municipal utilities were able to enter into long-term contracts. Government prevented the private utilities from doing the same thing.

The municipal utilities were able to negotiate the lowest prices available for power. Government forced the private utilities to pay the outlandish prices on the government’s power exchange.

The municipal utilities were allowed to adjust their rates to reflect the actual cost of power to consumers. Government forced the private utilities to sell at astronomical losses.

The final argument is simply an ideological one: that power is just too important to be left in private hands. Really? Food is a great deal more important and private hands have kept this nation well fed for centuries. Picturing the Department of Motor Vehicles running the local supermarket should sober even the most euphoric of the government takeover advocates.

California’s Independent System Operator is predicting a 6,000-megawatt shortfall this summer. When there is no electricity on the transmission lines, it really won’t matter who owns them. During the hottest hours of the hottest days of the year, when as many as 6 million homes are without electricity, it may begin to dawn on most people that socialism doesn’t work any better in California than it did in the Soviet Union.


Senator Tom McClintock (R-Thousand Oaks) represents the 19th State Senate District in the California Legislature. His website address is www.sen.ca.gov/mcclintock.

Filed Under: Guest Columns

About Rod Adams

Rod Adams is Managing Partner of Nucleation Capital, a venture fund that invests in advanced nuclear, which provides affordable access to this clean energy sector to pronuclear and impact investors. Rod, a former submarine Engineer Officer and founder of Adams Atomic Engines, Inc., which was one of the earliest advanced nuclear ventures, is an atomic energy expert with small nuclear plant operating and design experience. He has engaged in technical, strategic, political, historic and financial analysis of the nuclear industry, its technology, regulation, and policies for several decades through Atomic Insights, both as its primary blogger and as host of The Atomic Show Podcast. Please click here to subscribe to the Atomic Show RSS feed. To join Rod's pronuclear network and receive his occasional newsletter, click here.

Primary Sidebar

Categories

Join Rod’s pronuclear network

Join Rod's pronuclear network by completing this form. Let us know what your specific interests are.

Recent Comments

  • Eino on Oil and gas opposition to consolidate interim spent fuel (CISF) storage facilities in Permian Basin
  • Rod Adams on Can prototype nuclear reactors be licensed in the US under current rules?
  • Rob Brixey on Can prototype nuclear reactors be licensed in the US under current rules?
  • Jon Grams on Oil and gas opposition to consolidate interim spent fuel (CISF) storage facilities in Permian Basin
  • Rod Adams on Oil and gas opposition to consolidate interim spent fuel (CISF) storage facilities in Permian Basin

Follow Atomic Insights

The Atomic Show

Atomic Insights

Recent Posts

Oil and gas opposition to consolidate interim spent fuel (CISF) storage facilities in Permian Basin

Atomic Energy Wells

Enough with “renewables!”

Can prototype nuclear reactors be licensed in the US under current rules?

Atomic Show #303 – Bret Kugelmass, CEO Last Energy

  • Home
  • About Atomic Insights
  • Atomic Show
  • Contact
  • Links

Search Atomic Insights

Archives

Copyright © 2023 · Atomic Insights

Terms and Conditions - Privacy Policy