Posted at 8:29 p.m. PDT Tuesday, May 1, 2001

Secrecy about energy crisis must stop

BY DAN GILLMOR Mercury News Corporate bosses and tin-pot dictators love secrets. That's one way they keep the masses in line.

Secrecy has been the rule during the California energy crunch. Utilities, suppliers, regulators and politicians have offered the public a variety of statements, ranging from bland to alarmist, backed by little or none of the information that would help people figure out who's telling the truth.

What don't we know? Among other things:

We don't know the kind of details that would tell us whether, much less how, the wholesale electricity suppliers to California's utilities have been manipulating the markets through the power-bidding process. We're not part of the cozy system of brokering that arose after the pseudo-deregulation in 1996. Price and contract data are trade secrets, insist the players. Uh-huh.

We don't know what kind of revenue the various independent suppliers are generating in California. They refuse to break that down in their financial reporting, saying they only report national and international numbers. Would the numbers embarrass the generators?

Gov. Gray Davis, spending our tax money to buy the power that's keeping the lights on, is sphinx-like in his refusal to explain the details to the public. That would compromise the state's ability to make good deals, he says. Davis says state coffers will be replenished through a bond issue, which in turn will be paid off from customers' electricity bills -- bills that will be significantly higher than they are now. (This is the same leader who pledged there would be no rate increases, a promise that was absurd from the moment he made it.)

What little data we have about power-plant outages prior to last year is considered so unreliable as to be essentially worthless. When energy suppliers profit from outages because the already short supply is cut even further, they have every incentive to take plants down on the flimsiest of excuses, or even pull plants out of production solely to drive up prices.

The regulators who do know what's going on won't share what they've learned with the public that pays their salaries. The Federal Energy Regulatory Commission, for example, has provided almost no details about its supposed investigations into price and supply manipulation. Requests for more information have been met with classic bureaucratic stonewalls. Still, even if we aren't being allowed to learn the facts of how the situation got this way -- and may well be getting worse -- there are a few things we do know:

The generators are only doing what comes naturally. As a result of scandalous lawmaking and regulation, they've been invited to send prices into the stratosphere. They are greedy, but not stupid.

We could curb peak demand by pricing electricity in a rational way. Charging the same price the entire day is lunatic given that buying power, even from non-gouging companies, costs utilities much more during the daytime peak loads than during the night.

Solar power could help. California's peak load comes in the summer as people turn on air conditioners. But hot summer days, when air conditioning is most needed, are also the best days to generate electricity from sunlight.

Conservation is a huge part of the solution, contrary to this week's claims by Vice President Dick Cheney, who got rich in the oil-services industry. The peak-period megawatt you don't have to generate is almost always cheaper than the one you do. The things we do know could help us prevent the next energy crunch. But the lack of facts is preventing us from finding out the whos, whens and hows of the current crisis. We need information, and we're not getting it.

What we're getting is unprintable in this family newspaper. And we shouldn't stand for it.

Dan Gillmor's column appears each Sunday, Wednesday and Friday. Visit Dan's online column, eJournal (weblog.mercurycenter.com/ejournal). E-mail dgillmor@sjmercury.com

http://www.siliconvalley.com/docs/opinion/dgillmor/dg050201.htm

-- Martin Thompson (mthom1927@aol.com), May 02, 2001

Answers

One measure California government should take, that is within the normal limits of governmental power, would be to impose high corporate income taxes on "windfall profits" from California sources. This would have several benefits. First, it is less drastic and more acceptable than outright seizure, but with similar (though less total) effects. Second, the tax would largely offset the gouging the State is suffering, as a sizeable chunk is returned to the State in taxes. Since the State is the payor, it would be hard to evade this tax. Third, tax audits (or the threat thereof) end the secrecy surrounding power generator profit levels; yet without compromising the Governor's stated reasons for secrecy, as a tax audit is not a public proceeding. Fourth, it would delay or even avoid California's otherwise inevitable bankruptcy. Finally, such a tax is just. Since only California source profits are taxed, the power generators' private property interest in making a reasonable profit is protected. No profit, no tax. And there is much precedent for a "progressive" tax rate structure; in which the tax rate rises along with income level. Why isn't this being done? Taxation is at least a partial 'end run' around the F.E.R.C.'s refusal to keep prices reasonable, and the State has the jurisdiction to levy tax on California source income, without Federal permission.

-- Robert Riggs (rxr.999@worldnet.att.net), May 02, 2001.

Bull Siit, and a Call to Shaky.

-- My story (andIam@sticking.com), May 04, 2001.

Pardons: that was Bull Shit and a request for answer from "Shakey" I see it "shaking" from this end. Though the end result brings not the earth stopping to a stance. It is not the first time, for those without. Imagine those fools, one day with much money, the next day, none. How Horrible a circumstace. Signed: Po and still living.

-- My story (andIam@Sticking.com), May 04, 2001.