California Power Surplus City
From a news story by
CNN San Francisco Reporter Don Knapp
January 11, 2001
While California’s giant electric utility companies struggle
to stay afloat in the face of skyrocketing energy costs, they might
look to the little town of Redding, California to learn how to do it.
Edward and Nina Goehring use electricity to heat their home, their water,
their spa, and in summer, to run their air conditioning.
Now, in the midst of California’s electric energy crisis, they’re
glad they’re all electric, and that they live in Redding.
Edward Goehring a Redding California resident says, "Its given
us ease of mind because we know we’re not going to be hit with
these tremendous rate increases that the rest of California is having."
The city of 80-thousand generates most of its own power with three gas
turbines, a steam plant, and a small generator at a dam. Redding also
buys electricity at below market prices under long term contracts from
other power generators.
That totals more electricity than Redding needs. It sells the rest on
the wholesale market.
Jim Feider of the Redding Electric Utility says, "The revenues
that we get from that kind of sale out on the open market, we bring
home to pay off the infrastructure of this power facility here, as well
as other investments to date, and ultimately provide rate relief for
our rate payers here at home."
Giant utilities P.G.&E. and Southern California Edison and San Diego
Gas and Electric say they’re facing bankruptcy because of the high
prices they’ve had to pay for new electrical energy to meet increasing
demand.
Redding has turned a tidy 18- million-dollar profit supplying energy
to the big utilities.
While most Californians are looking at rate increases, Redding residents
are looking forward to rate cuts. That’s because a new power plant
soon to be built here could drop rates twenty percent in the next year
and a half.
Fate and foresight combined with Redding’s decision to put the
city into the electric business almost eighty years ago.
Jim Feider says of that foresight, "I think the city is feeling
very good right now about the decision they made long before I got here.
And we want to keep them on that path."
A path that keeps Redding free from the dominance of the big power utilities.
Additional Notes:
California deregulated its
power industry in 1997 (see note below about deregulation). In
many parts of California, wholesale rates for buying electricity have
gone up 20 to 30 times higher than before.
Municipal (city-owned) power utilities were not affected by deregulation.
This has kept the price low in Redding. Even cities like Redding could
run short of energy if they are forced to sell their electricity to
the big companies.
Deregulation is the process of removing regulations from a company
or group of related businesses. It results in a change from a situation
where regulations controlled prices and actions of a particular group.
For example, airlines were "deregulated" in the United States,
resulting in great changes in prices, routes, and procedures. The idea
is that deregulation leads to greater competition, with resulting lower
prices. That doesn’t always happen in real-life, as we have seen.
Last Minute Developments:
On January 17, 2001, California suffered its first major blackout. Blackouts
have continued. On January 19, 2001, the California governor authorized
the state to buy electricity and sell it to the utility companies at
a low price. No one knows what will happen next.
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