The BIG California LIE

The BIG LIE is that retail competition is impossible in electric markets. The implementation of a competitive retail market was the center of the debate in California. Instead of cooperating to implement it, the three big California utilities, that didn't care about the end-custumers, acted very irresponsibly. EWPC is the paradigm shift to show that retail competition is not only possible, but absolutely necessary to turn the electricity industry into a vibrant value added business for all stakeholders.

Dear Mr. Giegler,

Thanks for the update on the data. It seems to makes more sense now. Presley suggestions on stranded costs are commented below to show how they evolve in the California case.

Leonard Hyman, a noted research analyst, wrote that the utilities scoffed at the idea of deregulation when he spoke to them: “… I got the impression that they viewed restructuring as a nutty scheme that would never got support beyond a few regulatory staffers.” But deregulation plans continued and Hyman wrote: “I think that this movement perturbed the utilities. I’m not sure that the big utilities agreed on what they wanted… but in the end, they got together and went for what looked like a last minute deal.”

“The deal”, said Hyman, “look like this: the utilities would collect their stranded costs, however defined, what looked like the real prize, and they bought into the rest of the proposal.”

The above fits with Adam Kahane impression: "The primary focus of PG&E's management attention was therefore not on customers, but on formal public hearings before the CPUC. Fittingly, eight of the nine members of the company's executive Management Committee were lawyers."

Kahane added about a PG&E retreat in his second year that "was a profound letdown. I watched the business sections in stupefied disbelief. The executives ignored the analytical material, played power games, ganged up on each other, pretended to misunderstand (as Don is doing), settled old scores. I was deeply disillusioned and felt my commitment to the company slipping away. This was not the brilliant, informed, rational decision making that I had been trained to expect..."

Now, if we stop, and recall that electric power systems are non-trivial paradigms under the control of the VIUs, we can come to the conclusion that the California utilities did not have the required leadership to be in business. The whole world knows that the California debacle was very costly. What many people don’t know is the costlier damage done by a big lie to perpetuate an obsolete scam to the whole world. It is because of such irresponsibility that I repeat the need to consider A Vertical Integration Conspiracy Theory for the US Judiciary, from which I select the following:

“According to Eamonn Kelly in his book “Powerful Times: Rising to the Challenge of our Uncertain World,” page 35, Winston Churchill said: “A lie gets halfway around the world before the truth has a chance to get its coat on.” On page 36, Kelly says that “Conspiracy theories can, ironically, provide an ordered framework with which to understand chaotic events.”…

Picture yourself in the year 2000, and as a practical analyst that knew about the protection inherent in utility regulation and also knew what had happen in the US Midwest in the summers of 1998 and 1999. … “The debate in California has changed remarkably over the past year or two. Discussion now focuses not on whether retail competition or direct access is possible, but on how to make it happen. The three California investor-owned utilities affected by the commission's decision convened an industry working group, called the Western Power Exchange (Wepex) to address the issues related to implementing the new competitive retail market.” Please answer, to the best of your knowledge, if there might be some ground for a complot theory on which Enron was a just a casualty.

So, to go back to the starting point, please inform the amount of DWR charges that correspond to high price long term contracts of good old days regulation that fostered inefficiency (old scams), which led to the restructuring experiments, in the first place. That is where the comparison of vertical integration and EWPC should begin.

Best regards,

José Antonio