First, consider the retail price cap. California’s utilities must pay 30+ cents for a kilowatt hour (kWh) of electricity from the state power pool during peak demand periods. But state regulations prohibit most of them from selling that power for more than about 7 cents per kWh. In a deregulated market, utilities could pass those costs on to consumers. State policies that protect consumers from the true price of electricity are subsidies for energy consumption.
While Greens criticize free markets, they detest energy subsidies. And rightly so. But while politicians are deaf to the economists’ plea to deregulate energy prices, California’s self‐ proclaimed environmentalists are joining the populist mob to keep the subsidized juice flowing, come hell or high water.
What’s going on?! Subsidizing energy use leads to blackouts under the current regime. It also leads to excessive energy consumption and, accordingly, more pollution than would otherwise occur. Apparently, energy subsidies for Republican‐leaning corporations are one thing; energy subsidies for residential ratepayers are another. Likewise, environmentalists back energy conservation, but reject the sure way to accomplish it: allowing energy prices to rise to market levels.
Second, consider Governor Davis’ call for the state to cut through the web of regulatory red tape to build as many power plants as necessary. Much of that red tape, however, is colored green. The state’s air pollution laws, for instance, require power generators to procure tradable nitrogen oxide emission permits before they can go online. Generators find those permits, however, so expensive and so scarce that dozens of power plants limited production or suspended operations at the height of the spike in December. Davis’ pledge to waive those permit requirements is a slap in the face to Green lobbyists: When push came to shove, it was air quality — not cheap power — that went over the side of the economic ship.
Where were the demonstrations?! Where were the marchers?! For years, environmentalists have raged against the GOP as the party that will trade environmental quality for a few more bucks in the corporate pocket. But when Democrats march lock step behind those same policies, the Greens are nowhere to be found.
Finally, consider the legislature’s scheme to resolve the crisis via a state takeover of private hydroelectric facilities. Now, it’s unclear how changing the ownership of existing dams will remedy the shortage of power that’s driving this crisis. But put that aside. Don’t the environmentalists want to tear down damns and save riparian resources? Shouldn’t they remind Californians that the price of hydro is the death of fisheries and devastation of precious ecosystems?
While it’s true that the utilities weren’t going to shut down those facilities as a sacrifice to Mother Earth, at least keeping those dams in private hands holds out the hope that environmentalists could some day buy them from the power companies. As the Greens have learned concerning the federally‐owned dams in the Pacific Northwest, once the government owns such facilities, there’s likely no chance that environmentalists will pry them away from well‐organized political interest groups … such as ratepayers who see them as the thin blue line between them and a power price spiral. At the least, the Greens might have argued that the dams should be dismantled and not exploited for cheap electricity. But they were too busy fighting the nomination of Gale Norton to say much of anything.
This crisis makes two things clear. First, the environmental leadership is less a bunch of ideological extremists than a collection of political activists. Rather than stand on the unpopular side of public opinion, environmental leaders take the easy way out: They lay low when necessary and come back only to peddle nonsensical “free lunch” policies that dishonestly imply that no personal trade offs are necessary to advance ecological goals.
Second, when push comes to shove, the environmentalists are more interested in the expansion of state power and the end of free markets than they are the advancement of environmental protection. That’s perhaps the greatest tragedy; there is a coalition waiting for them if they’d enter into it.