It’s called “spin.” It’s the way you portray an event to the media or the public so defeat looks like victory, failure like success, greed like benevolence.
You see spin a lot in the government arena, usually obscuring some politician’s gaffe. Now you’re seeing it more in the corporate world. During California’s ongoing energy crisis, you’ve seen a lot of it.
Take these two recent news events: Duke Energy’s offer to provide San Diego Gas & Electric Co. with a long-term supply of electricity at half the going rate; and PG & E; National Energy Group’s promise that its proposed Otay Mesa Power Plant would lower local rates.
In both cases, there was so much corporate spin on these stories, one almost expected Dorothy’s house to fall from the sky.
Both companies want to operate power plants in San Diego County. PG & E; wants to build a 500-megawatt gas turbine generating facility on Otay, while Duke wants to either resurrect or replace SDG & E;’s old Chula Vista power plant.
With these projects, both companies want to be seen as white knights doing battle with the dreaded dragon of high energy rates , not an unreasonable desire since energy producers are rapidly taking the place of politicians, lawyers and journalists as the most disliked and distrusted professionals.
Both companies also want to get their projects through the regulatory pipeline as quickly and as , dare we say it? , cheaply as possible. How better to do that than to promise the availability of cheap power to ratepayers who have just been plundered by energy pirates?
The problem is, what both companies promise just can’t happen.
Duke says it can provide SDG & E; all of its electricity needs for 6 cents per kilowatt hour under a five-year contract. That’s almost half of what electricity was selling for at the time the proposal was made.
PG & E;, on the other hand, is trying to build support for its new power plant by promising it will be able to provide San Diego with badly needed energy, and do so at lower rates.
Yet neither of these promises are possible in California’s current deregulated energy market.
Under California law, nearly all electricity bought and sold in the state must be offered through the California Power Exchange (CalPX), a private, nonprofit commodity market for energy. Under the same state law, utilities like SDG & E; are required to buy at least half of their power from the CalPX.
Unfortunately, CalPX’s policies are one of the prime reasons for soaring energy costs. Under CalPX’s policies, the highest bid , not the lowest , offered by energy producers and traders becomes the “clearing rate,” or the price all buyers pay for electricity. This is hardly the definition of a competitive marketplace.
Add to this the fact that most of California’s generating capacity is owned by a handful of mega-corporations, including Duke and PG & E; , another strike against competition.
Under current law, San Diego County , which already has more than 60 large and small electric generation units , could be paved over with power plants, and there would still be little promise local ratepayers would get cheaper power from them , or, for that matter, any power from them at all.
California’s deregulated energy market also fails to provide any guarantee power produced in one area actually will be used in that area. Any electricity produced in San Diego can go just about anywhere , to Las Vegas to light up the Strip, for instance.
In fact, during last summer’s rate crunch , when we were being warned of impending brownouts and blackouts , electricity exported from California actually increased threefold. These exports, the Federal Energy Regulatory Commission staff concluded, led to a scarcity of electricity in the state, which helped jack up prices.
Executives at both Duke and PG & E; are well aware of the limitations of California’s deregulated energy market; after all, the energy industry pushed it through the Legislature. But their spin doctors want us to believe they are heroes coming to our rescue, not the culprits who left us crushed by the weight of excessive energy rates.
None of this goes to the merits of Duke’s or PG & E;’s proposals for local power plants. They may well be excellent and much needed projects. But the projects must be considered by reviewing facts, not hype. Furthermore, local officials and citizens alike need to educate themselves as to what can and can not be done under energy deregulation in this state, and not let themselves be turned around by the whirlwinds of spin.
