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California’s Electrical Crisis and Conservation

Jeff Jones is a longtime political and environmental activist in Albany, New York. He is communications director of Environmental Advocates, an environmental policy group that includes energy conservation as part of its progressive agenda.

Your March 2001 Notes from the Editors convincingly explains the failure of the deregulation of the electric industry to protect residential ratepayers, and the excessive profits garnered by electricity generators. However, you omitted the environmental dimension, which is like analyzing the economics of the tobacco industry without mentioning the health impact.

The emissions from the generation of electricity account for half the carbon dioxide that causes global warming (automobiles contribute the other half). But, for the power industry, the more electricity generated and sold, the more profits. Your Notes criticize California’s electric generators for failing to invest sufficiently in new plants—but new plants will just add to the gathering global warming catastrophe, unless older plants are forced to close. According to last fall’s International Panel on Climate Change, human activity will heat the Earth three to six degrees Fahrenheit in the twenty-first century—making it considerably warmer than during any other era in human history, as Bill McKibben pointed out in his January 5, 2001 New York Times Op-Ed.

In New York, we are fighting the siting of polluting emergency generators, and insisting on full environmental review of the cumulative impact, on poor communities and communities of color, of the dozens of siting proposals now before regulators. But there are alternatives. Most important, the greatest available source of new capacity lies in energy conservation and efficiency. This is the secret of the Los Angeles Department of Water and Power and other successful local utilities. Efficient use of current sources of power, and cutting down on waste, can avoid crises of supply far more reliably than power plant construction can. That’s why environmentalists are demanding that state governments immediately cut their own electricity use 10 percent and that renewable energy sources be required to make up substantial percentages of states’ energy portfolios.

Today Americans are using more fossil fuel than we did in 1998, and five or six times more per capita than the average human being. Progressives must demand the reversal of this direction.

The Editors Reply:

Jeff Jones is right that a complete treatment of the California electrical crisis—which we did not endeavor to provide in our brief Notes from the Editors to the March issue—requires a discussion of the environmental dimension, particularly global warming (on this see the December 2000 Review of the Month on “Capitalism’s Environmental Crisis—Is Technology the Answer?”). What we were merely trying to explain in our March Notes is that the current crisis in electricity rates is due to deregulation—that is, letting the unbridled market take over—which led to the sharp increase in wholesale prices at the expense, ultimately, of final consumers. The point that we made on the failure of industry to invest in new plants, together with the removal of capacity from the market, as the immediate source of the problem, was not meant to argue for building new fossil fuel or nuclear plants, but was an explanation of how monopoly price mark-ups were put into place. This is capitalism at its exploitative best.

What this means is that the electrical crisis, associated with the increase in wholesale prices, could not be attributed to increasing demand on the part of consumers, which has remained relatively stable. Still, as Jeff Jones eloquently explains, our argument represented only part of the story. The other part is the failure to promote conservation and solar power solutions, which would make the public less dependent on high cost and environmentally destructive energy sources. It only remains to be added that this failure is not accidental, but is itself attributable to rules of profit maximization under monopoly capitalism. On this, see Paul M. Sweezy, “The Guilt of Capitalism,” Monthly Review, June 1997.

2001, Volume 53, Issue 02 (June)
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