California's energy crisis
by steve - 2001-07-22 - ( life / health / environment / politics )
Subject: energy crisis
Date: Friday, May 11, 2001 9:13 AM
Dear Mark Williams (KFBK talk show host, for those others getting this message)
You mentioned the $2,000 price of energy the other day, not paid to the power generators, but to the middlemen. From what I understand, (and please correct me where I am mistaken) energy is to be bought daily and that is why we have middlemen like Enron. Enron scoops up contracts for energy (probably on long-term) for low rates. If the state didn't ask for enough energy early enough, it has to go to the spot market, through the ISO, probably still dealing with middlemen such as Enron.
So, here's the game: Enron is nice enough to offer $10 per megawatt to the energy producers, giving them more than their costs and keeping them happy. It holds that energy hostage until the day before when the state has to choose how much it wants to get, telling the state it has 99% of the energy needed. The state has to use the ISO to get that last 1% of the energy (that middlemen have tied up). The only energy left to obtain (because middlemen have 99% of it tied up) is very expensive, like $2,000 per megawatt.
Because the price for the day is set by the last seller to energy pool, the 99% held by middlemen plus the 1% held by tiny local producers is sold for $2,000. Well, guess what? Enron makes $1990 on 99% of the energy, making enormous profits.
Does Enron sell all of its energy? No, but if it makes so much on what it sells, it can throw away a lot and probably writes it off as a loss!
Follow the money! So who owns Enron and the other middlemen? is it people like George Bush, Dick Cheney, and others in his crowd? Yes! So, guess why they don't want to conserve?
Would production of more efficient devices help the economy? Yes, because industry would hustle to build them and customers would (and are) hustling to buy them. So, it looks like our administration is anti-conservation because they want to rape the people's savings to fill their own coffers!
Can we do something about it? Yeah, but not what the whole media scene is saying. First, change it so energy is not bought daily through middlemen. Second, don't have the day's price set by the last (and most expensive) supplier. Third, tell the power people that the state of California will not buy energy over a certain reasonable price, making it so it's not profitable for middlemen to hold back energy and write it off until their other purchases can be sold at obscene prices.
Will anyone do this? Not unless someone who has a soap box to stand on, like radio, TV, and the papers point these simple things out!
blog version similar posts here ... and elsewhere
Leave a new comment regarding "ca-nrg-crisis":