No new plants ,
 This may be of some use, I am still looking


C. Discouraging New Power Supplies
California is not an easy state in which to build a power plant. Licensing=
=20
procedures and rules are expensive and time consuming. Environmental=20
regulations are among the most stringent in the nation, and power plants ar=
e=20
unpopular neighbors, often sparking resistance from local residents. In=20
California, plants often take three to five years from concept to operation=
,=20
while in other Western states the process can be as short as one year.
The long delays in adding capacity in California had set the state on the=
=20
road to shortages long before restructuring.
Thanks to these barriers, in 1996, as restructuring was debated, California=
=20
had not seen a new power plant built in a decade. Yet the state still had=
=20
excess energy generation capacity. Indeed, one reason for restructuring was=
=20
to let market incentives determine capacity decisions. The architects of=20
restructuring assumed that competition and profit opportunity would bring n=
ew=20
power plants to keep electricity supply well ahead of demand in spite of th=
e=20
difficulties state regulations present. And, despite restructuring=01,s fai=
lure=20
to allow a competitive market, restructuring did stimulate new capacity=01*
between March 1998 and the end of 2000 the California Energy Commission had=
=20
licensed nine new power plants that will generate over 6,000 MW, about 16=
=20
percent of the state=01,s average daily load.
But these new plants are so slow in coming=01*the first won=01,t be online =
until=20
mid-2001=01*they won=01,t help solve the current shortage. The long delays =
in=20
adding capacity in California had set the state on the road to shortages lo=
ng=20
before restructuring. Since 1988, the state energy commission has been=20
predicting that demand would catch up with and surpass supply. But state=20
leaders did nothing to change the barriers that discouraged new companies=
=20
from building new power plants. At first, discussions of deregulation may=
=20
have discouraged new investment, since private companies did not know what=
=20
kind of law the state would pass. But restructuring ended that uncertainty=
=20
and companies saw an opportunity to make money from growing demand in=20
California. The new plants they are now building will likely assure that th=
e=20
current shortage will not persist.
The current policy debate over what to do about the shortage has focused on=
=20
providing more power plants as soon as possible. Gov. Davis created a "gree=
n=20
team" to streamline regulatory review of some projects, but the new process=
=20
applies to only two of the 13 projects undergoing review. Davis has also=20
proposed a state energy authority to build and operate new power plants, bu=
t=20
state ownership and construction will only speed up projects if the state=
=20
does not follow all permitting and environmental rules, the same result cou=
ld=20
be accomplished by waiving rules for private power generators and without=
=20
consuming tax revenues to pay for the plants.
But waiving the rules is not likely to be politically acceptable and may no=
t=20
even be wise. A better approach would be to change the regulatory approach=
=20
without changing standards. California regulators view their roles as=20
ensuring that standards are not violated=01*they don=01,t care if the power=
 plant=20
gets built. Thus they make themselves like the troll under the bridge=01*no=
 one=20
gets by without meeting their terms. State leaders could speed up the proce=
ss=20
of adding new power plants by changing the regulator=01,s mission so his go=
al is=20
to make sure that the power plant gets built without violating any standard=
s=01*
a subtle but important change in approach.
Indeed, speeding up the review process by taking a constructive approach to=
=20
solving problems as they arise, rather than just kicking the problem back t=
o=20
the developer, could improve the environmental quality of the state=01,s en=
ergy=20
supply. New generation plants are cleaner and more efficient than older one=
s=20
and will displace some of the dirtiest plants in a competitive market. With=
=20
the right approach, state policy makers can meld the incentives to invest=
=20
that supply constraints and market prices create with a more positive=20
approach to permitting and environmental reviews to speed up completion of=
=20
new plants, shortening the span of the state=01,s electricity shortage and=
=20
helping prevent future shortages
jeff.dasovich@enron.com