As a former California Public Utilities Commissioner (1999-2004), I would like to offer a few thoughts about smart meters.
"Smart" meters are devices that can remotely report electricity and gas usage readings as often as hourly to utilities without the need for human meter readers. The justifications offered by proponents are twofold. First, it is claimed that utilities can control electricity usage by sharply raising rates during hours of high system demand, thus discouraging consumption and reducing the need for additional generation capacity. Second, customers can supposedly benefit by moving their usage to hours when demand and prices are low.
While most residential customers are skeptical, this analysis has tremendous appeal to energy producers and market-oriented economists and regulators, the same folks who brought us the electrical deregulation catastrophe in 2000-2001. What is almost never part of the public discussion is the real motivation of smart meter proponents.
Utilities make their money in two ways: they are reimbursed through rates for their reasonably-incurred costs of providing service, such as paying their workers; and they are fully repaid plus a "reasonable" rate of return for long-term capital investments in their systems ("rate base"). Only the second adds to corporate profit, the bottom line. Replacing functioning existing meters, which have already been partially or fully amortized and have a low rate base, with expensive new ones provides a guaranteed stream of profits for decades to come.
For example, Southern California Gas Company's new meters, recently approved by the PUC, add over $1 billion to rate base and will bring the shareholders hundreds of millions of dollars in profits over the next 26 years, even if they don't work as advertised or become technologically obsolete during that time. As 1000 union jobs are eliminated in Southern California, customers will lose the safety-related services provided by human meter readers, even though there is no net cost savings from the new technology.
Most residential and small business consumers cannot afford the expensive systems that would enable them to automatically control their consumption in response to hourly price changes. The winners here will be large industrial and commercial consumers and perhaps some very wealthy homeowners. Even if non-time-of-use rates are maintained as an option for small consumers, they will go up as large consumers escape regulation that apportions utility system costs among classes of consumers. In fact, this outcome has always been a central goal of deregulation.
Despite opposition from consumer advocates, Schwarzenegger's PUC has enthusiastically rubber-stamped every smart meter project that has come before it. Whoever is elected Governor in November will be able immediately to appoint a majority of this powerful commission. Progressives need to make sure that the issue becomes part of the election debate.
[Full disclosure: I represent Utility Workers Union of America, Local 132 in its opposition to smart gas meters at the PUC; and I am President of the Board of The Utility Reform Network (TURN), which is leading the campaign to disclose the failings of PG&E's smart meters. I am also the Democratic candidate in the 65th Assembly District.]
As a person whose economic life was ruined 23 years ago at age 23, when I got a lupus diagnosis and lost my health insurance, I know I'm only alive thanks to government health care--and charity, which has so far kept me from dying of the poverty I have to stay in to GET the government health care.
After 9 long years of trying to clean up after the electricity mess that we experienced at the turn of the century, the fearless energy regulators of our state are once again going to proceed with electricity auctions.
Nine years after its state-sanctioned energy auction went bust in the western energy crisis, California is preparing to launch another daily electricity auction on Tuesday that it hopes will be more successful.
The new "day ahead" energy market will line up electricity resources for delivery the next day. The market will have a price cap of $2,500 a megawatt hour, about 50 times the going price of electricity in California today. Even a high price is unlikely to wreck the market this time because the state is being divided into more than 3,000 separate pricing points called "nodes." So high prices in one place won't necessarily spill over into another. (Wall Street Journal 3/30/09)
At least they did some more thorough testing of the system this time, and have installed more safeguards. But given our history with electricity on the open market, you would think this would make some news here in California. Perhaps there will be more stories as the actual auctions commence tomorrow, but you would like to see some advance notice for this kind of thing. (Note to media: I did a Google news search and double checked several sites. If you reported on the story, shoot me an email and I will highlight it.)
In theory, there are some decent reasons to believe a market based system would help. It points out flaws in the transmission system, and where we need more generation. That being said, this project needs to be monitored like a hawk. The regulators have said that they will be vigilant in pursuing anybody who violates the rules to game our electricity prices. The fact that they did simulations is great, but computers have a way of underestimating the human capacity to stretch and outright break the rules in the name of greed.
If there are any developments surrounding these auctions, I'll be sure to keep you updated.
Not unexpectedly, it required a major disaster to awaken former Federal Chairman, Alan Greenspan, to the long overdue reality that the free-market, free enterprise economic model fails to trickle down wealth to the poor and near poor but concentrates wealth at the top.
The free market model or Neoliberalism was developed by Friedrich Hayek and Milton Friedman at the Chicago School of Economics Chicago where it became an axiom that the private sector was the key to long-term economic stability. Neoliberalism has gradually become the prevailing economic conventional wisdom in the United States and has been foisted on most countries through pressure from the United States or through the IMF and World Bank, America's secret instrument of exploitation.
This past week, Naomi Klein bravely stepped into the lion's den this week and addressed the University of Chicago, protesting their bid to name an economic research center after Milton Friedman. It was a bravura speech where she made the argument that the current financial crisis is the final repudiation of Friedman's twisted theories of unregulated capitalism.
More than that, what we are seeing with the crash on Wall Street, I believe, should be for Friedmanism what the fall of the Berlin Wall was for authoritarian communism: an indictment of ideology. It cannot simply be written off as corruption or greed, because what we have been living, since Reagan, is a policy of liberating the forces of greed to discard the idea of the government as regulator, of protecting citizens and consumers from the detrimental impact of greed, ideas that, of course, gained great currency after the market crash of 1929, but that really what we have been living is a liberation movement, indeed the most successful liberation movement of our time, which is the movement by capital to liberate itself from all constraints on its accumulation.
So, as we say that this ideology is failing, I beg to differ. I actually believe it has been enormously successful, enormously successful, just not on the terms that we learn about in University of Chicago textbooks, that I don't think the project actually has been the development of the world and the elimination of poverty. I think this has been a class war waged by the rich against the poor, and I think that they won. And I think the poor are fighting back. This should be an indictment of an ideology. Ideas have consequences.
Now, people are enormously loyal to Milton Friedman, for a variety of reasons and from a variety of sectors. You know, in my cynical moments, I say Milton Friedman had a knack for thinking profitable thoughts. He did. His thoughts were enormously profitable. And he was rewarded. His work was rewarded. I don't mean personally greedy. I mean that his work was supported at the university, at think tanks, in the production of a ten-part documentary series called Freedom to Choose, sponsored by FedEx and Pepsi; that the corporate world has been good to Milton Friedman, because his ideas were good for them.
But he also was clearly a tremendously inspiring teacher, and he had a gift, like all great teachers do, to help his students fall in love with the material. But he also had a gift that many ideologues have, many staunch ideologues have-and I would even use the word "fundamentalists" have-which is the ability to help people fall in love with a perfect imagined system, a system that seems perfect, utopian, in the classroom, in the basement workshop, when all the numbers work out. And he was, of course, a brilliant mathematician, which made that all the more seductive, which made those models all the more seductive, this perfect, elegant, all-encompassing system, the dream of the perfect utopian market.
Klein mentions the Free To Choose series, and later on she highlights something I forgot - the man who introduced one of those series on PBS:
"Being free to choose means being free to make your own decisions. Free to live your own life, pursue your own goals, chase your own rainbow without the government breathing down your neck or standing on your shoes. For me it meant coming to America, because I came from a socialistic country where the government controls the economy."
That was Arnold Schwarzenegger in 1990, spouting free market fundamentalism in a corporate-sponsored documentary which mainstreamed ideas that today have brought us to the brink of economic failure. It's important to know what altar at which Schwarzenegger worships. It's important to know how he was, for a long time, the glitzy front man for Friedmanism, the showy snake oil salesman that got Joe Six-Pack to think that corporate behemoths eliminating rules for themselves was in the best interests of the common man. If Friedman was P.T. Barnum, then Arnold was the star attraction in the center ring of the circus. And he clearly believes, or at least is willing to front, that these ideas, about "free enterprise and free people," are immutable, hard science, incapable of being wrong.
Except we are now at a moment when, as governor, Schwarzenegger is bearing the brunt of the worst effects of unbridled capitalism. His state is caught up in the credit market freeze, with no money to pay the bills. He is begging the state's citizens to buy bonds and bail the government out, an approach taken so clumsily that he got Wall Street shaken at the precise time when he has to go into the market to borrow money. The state's public infrastructure is crumbling on his watch and even that won't be enough to make up the revenue shortfall.
A lot of people would let Schwarzenegger off the hook for this. The national economy went bad, and the financial markets failed as a result of the housing bubble bursting, and surely the governor of California can't be held responsible for that. Except he is such a devotee of Friedmanism, and in fact one of its key pitchmen, that of course he is guilty. Guilty of the same faith in capitalists not to be driven by greed. Guilty of stripping regulation and empowering corporate America to live in a tax-free and restraint-free bubble. And as the current cesspool of deregulation, where market forces run wild and greed becomes virtue, gets a reckoning due to the carnage it has caused, so too must the man who introduced Free To Choose all those years ago. He was wrong then, and he's doubly wrong now. To quote Naomi Klein:
Ideas have consequences. And when you leave the safety of academia and start actually issuing policy prescriptions, which was Milton Friedman's other life-he wasn't just an academic. He was a popular writer. He met with world leaders around the world-China, Chile, everywhere, the United States. His memoirs are a "who's who." So, when you leave that safety and you start issuing policy prescriptions, when you start advising heads of state, you no longer have the luxury of only being judged on how you think your ideas will affect the world. You begin having to contend with how they actually affect the world, even when that reality contradicts all of your utopian theories. So, to quote Friedman's great intellectual nemesis, John Kenneth Galbraith, "Milton Friedman's misfortune is that his policies have been tried."
It's the ideological blinders that caused this crisis that must be taken off if we're ever going to get out. Schwarzenegger is somehow seen as the "good cop" Republican in the mix of California, wanting ever so to do the right thing. But the one area of jurisdiction, the one part of this crisis where the California governor could have had a hand in stopping the bleeding, when he could have imposed regulations to help stop predatory lending and rein in the runaway mortgage market in one of the biggest bubble states in the country, Arnold not only decided to do nothing then, but has continued to do so. Laissez-faire remains his core philosophy, the failed philosophy of conservative economics.
I guess the banks and the lenders need to be free to choose.
It would be irresponsible for state Democrats not to remind the public that the pain and anxiety they are seeing today is a cause of the insane embrace of Friedmanism, and that the man at least in large part responsible is the muscle-bound Governator who was willing to put a smiley face on the shock doctrine.
One day your website is yours, and the next day it is someone else's. Organizations, businesses and regular people are at the mercy of a confusing deregulated system.
A little over a week ago the Speak Out California website suddenly disappeared, and viewers instead saw a website full of advertisements.
Does your credit card or bank loan agreement have an "arbitration clause?" More and more consumer-oriented contracts and "agreements" have clauses specifying that disputes must go to arbitration rather than our civil justice system. The justification for this is that arbitration saves the time and expense of working within our legal system. But here's the thing: the corporations choose the arbitrators and every arbitrator knows they will never, ever, ever, ever (ever) get another job if they rule against the corporations. Never.
And guess what: 98.8% of arbitrations end up in favor of the corporations. This is not a surprise.
(The Money Comes in, The Favors Go Out. It's time to stop this cycle. So many issues would get a better crack at the apple if we didn't have all this money flowing into Sacramento. Think about recommending this on Daily Kos. - promoted by SFBrianCL)
With the Katrina anniversary, there has been lots of talk about what government needs to do to protect citizens from another disaster. The other day, California Assemblymember John Laird told the Capitol Weekly, "We have less flood protection than they had in New Orleans. Sacramento is really not protected and the thousands of people who live here are at risk." But this wasn't a story about the anniversary, this was a report on how flood protection in California died a suspicious death in the legislature:
This week, just as Senate President Pro Tem Don Perata put on hold an eight-bill package of flood-protection legislation, one of his political committees received a $500,000 donation from the California Building Industry Association (CBIA), one of the package's biggest opponents.
The donation is the single largest that a Perata committee has received since he became Senate leader in 2004.
