As California homeowners face skyrocketing electricity bills and rolling blackouts, state utility companies encounter bankruptcy and investigations by state and federal committees.
In a recent poll by the Los Angeles Times newspaper, more than five out of six Californians believe power companies have manipulated the electricity market to boost their profits. (Wholesale prices of electricity have jumped from an average of $30 per megawatt hour last year to $330 in January.) Most Californians, however, remain unconvinced that the state suffers from a shortage of energy, according to the poll.
The Federal Energy Regulatory Commission earlier this year ordered wholesalers to justify $124 million in charges sold to California utilities in January and February or pay refunds to consumers. While demand in California has increased 4 percent over the last year, wholesale prices have jumped 266 percent, and profits of some wholesale suppliers soared an average of 508 percent.
Stemming from a failed experiment to deregulate the state's electricity market in 1996, the current energy problems facing California are a laundry list, which the federal government has, as of this writing, refused to help clean up outside investigating utilities.
Plenty of finger-pointing has plagued any immediate solution, with the blame focusing on premature deregulation and failure of Gov. Gray Davis (D) to act years ago on a looming energy crisis.
In May, the Bush Administration unveiled its energy policy, which calls for the construction of between 1,300 and 1,900 new power plants over the next 20 years. Vice President Dick Cheney previewed the policy package with 23 U.S. labor leaders, including UA General President Martin Maddaloni and other UA officials.
Organized labor, which sees the potential the plan offers for new jobs, has backed the President's policy, eager to see an end to rising energy bills around the country.
Eager to do their part, though, nearly all Californians polled by the Times said they are taking steps to conserve energy - from turning off lights to using less heat or air-conditioning.
The poll also found a number of Californians (13 percent) taking the expensive step of replacing old appliances with more energy efficient ones, which bodes well for West coast heating and cooling professionals, as well as those around the country closely following California's crisis. (As many as 25 other states are considering deregulation.)
"Companies specializing in energy conservation marketing programs are making hay in this area," says Stephen J. Lehotnen, executive v ice president of the California PHCC. "Though there were few if any blackouts this summer, I believe it's due to people changing the way they use energy. There's been significant conservation among our clients. They're living much different lives."
California was the first state to deregulate its electricity market. In a unanimous decision by the California Assembly, the move was supposed to lower consumers' bills by preventing utilities from passing rising costs on to their customers until at least March 2002. Deregulation was seen as a way to dismantle what the state considered a government-regulated monopoly.
Demand for power peaked in the summer of 2000. Californian utilities struggled to buy enough power from wholesalers, which raised their prices. Without the ability to pass the increase in costs on to its customers, utilities ran out of money.
Some solutions posed include earl rate increases, federal regulation of electric wholesale prices (which, so far, the federal government has refused to cap), or the negotiation of long-term contracts between utilities and power generators, so prices are not set on the volatile wholesale spot market.
The Times Poll interviewed 1,541 Californians over four days.
