Arnold benefits from energy pacts

first_imgSACRAMENTO – Despite a midsummer heat wave that has pushed energy use to an all-time high this week, experts say Gov. Arnold Schwarzenegger probably does not have to fear the blackouts that ended former Gov. Gray Davis’ political career. And he has Davis to thank for that. The long-term contracts Davis signed, at great political cost, guarantee plentiful energy for the next few years at what now look like good rates. “In an interesting twist of fate, he’s benefiting from the decisions that his predecessor suffered for,” said Frank Wolak, a Stanford economist who specializes in energy. “The terrible contracts” Davis “signed at the height of the crisis are now quite reasonable.” And while it is true that fewer plants have been built under Schwarzenegger than while Davis was governor, the California Independent System Operator, which manages the state’s power grid, said the state has adequate power supply, even during heat waves like the current one. The high temperatures are forecast to last at least through the beginning of next week. On Monday, the state shattered its previous energy consumption record, peaking at 46,501 megawatts. But the system did not falter, and Cal ISO did not have to trigger voluntary rationing by businesses. That does not mean the state could not face problems in the future. Experts say California could face blackouts if the electricity supply fails to keep pace with rising demand or if utilities do not negotiate new long-term contracts as the old ones expire in the next few years. State Sen. Joe Dunn, D-Garden Grove, said if a 100-year heat wave were to hit, the state would be vulnerable to blackouts because it does not have enough reserve power. That requires utilities to generate excess power, costing them money. A 20 percent reserve, he said, “is very costly. But the problem is, 10 percent is not adequate for a 100-year heat wave.” Angelides says Schwarzenegger is not preparing for the future because he has not encouraged as many new power plants to be built as Davis did. But experts said the slowdown was the result of so many power plants being built during the Davis administration, creating a supply glut that reduced the economic incentive to build new ones.160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! AD Quality Auto 360p 720p 1080p Top articles1/5READ MORE11 theater productions to see in Southern California this week, Dec. 27-Jan. 2Davis was recalled from office in 2003 and replaced by Schwarzenegger, in large part because of the energy crisis. Schwarzenegger’s Democratic opponent, state Treasurer Phil Angelides, has tried to capitalize on fears of a new wave of blackouts as temperatures climbed. This week, he warned of “a new energy crisis” and blamed Schwarzenegger for failing to build enough power plants. But energy experts say although population and job growth have pushed the system up near its capacity, today’s situation is nothing like the energy crisis of 2000-01. The blackouts occurred largely because of market manipulation. With utilities dependent on the spot market, energy companies such as Enron withheld supply to drive up prices. But with utilities now buying power under long-term contracts, there is little danger of a repeat. last_img