State-Funded Report Backing Return To Electricity Deregulation’s Western Grid Concept Was Written By Utility Consultant And Sacrifices Ratepayers For Investors

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Santa Monica, CA — A report released today by California’s electric grid manager, the California Independent System Operator, supports utilizing a 1999 California law from the electricity deregulation era to create a Western grid.  Consumer Watchdog warned it would once again commoditize electricity, divorce the costs of generation from the needs of ratepayers, and threaten consumers with higher costs to benefit investors.

“This report is of the Pacific Gas & Electrics, by the Edisons and for the Sempras,” said Jamie Court, president of Consumer Watchdog, who pointed out that the main consultants on the report work for the utilities. “California has more electricity than it needs and this snow job report is making the case for ratepayers to keep bankrolling new power plants and transmission lines that they don’t need so that utilities can get rich exporting energy someplace else. California ratepayers shouldn’t be subsidizing utilities to find new markets.”

Consumer Watchdog pointed out the report’s authors include Energy and Environmental Economics, a consulting firm that serves 32 utilities such as PG&E, Southern California Edison and possible market entrants including Consolidated Edison, Nevada Power, and Portland GE.  E3 has also advised clients on California energy policies such as cap and trade on their electricity exports, what natural gas power plants they might acquire in the Pacific Northwest, and analyzed the benefits of acquiring an ownership interest in an existing coal-fired plant.  Another consulting group, The Brattle Group, has worked for PG&E.

“This report was authored by consultants whose bread is buttered by the utilities themselves,” said Liza Tucker of Consumer Watchdog. “We should be closing power plants not creating new market rationales to justify bilking ratepayers to pay for them.”

California has large amounts of excess capacity, even without including solar power that is undercounted today. If clean rooftop solar power was fully counted in the state’s ambitious new renewable energy standard, that could shave the need for a spate of new natural gas plants that the Public Utilities Commission has already authorized. Each new plant costs roughly $2 billion and ratepayers in Southern California and elsewhere will foot that bill for the next two decades.

The report downplayed the role of coal in the mix in California. California has no more coal plants, but PacifiCorp, a giant Berkshire Hathaway division providing power in six western states that is entering the California market, generates 62 percent of its power from coal, according to a company fact sheet. The report assumed that coal plants face the same emissions costs as natural gas power plants. Natural gas is cleaner than coal, though still a dirty fossil fuel. Consumers would not have adequate control over how much coal power comes into California’s market, or know its point of origin, if the legislature adopts the study’s recommendations and Western grid plan.

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Liza Tucker
Liza Tucker
Liza Tucker is a consumer advocate for Consumer Watchdog, following everything from oil and gas to the regulation of toxic substances in the state of California. She comes to us from Marketplace, the largest U.S. broadcast show on business and economics heard by ten million listeners each week on 400 radio stations. Liza worked at this public radio show for a decade, first as Commentary Editor and then as Senior Editor for both Washington and Sustainability News.

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