San Diego Business Journal

"Some people just don't get it."

That was how Vice President Dick Cheney chided Californians earlier this year for being angry at the soaring cost of energy in the state. Cheney accused residents of the Golden State of causing the energy crisis by using too much electricity and blocking construction of new power plants. "Some people just don't get it," he said.

Well, maybe Cheney will finally get it. According to government officials, the power bill for the vice president's residence has more than doubled in less than two years, rising from $83,000 in fiscal 1999 to an estimated $186,000 this year. Obviously, the VP doesn't turn off the lights when he leaves a room.

And why should he? The man who received between $20 million and $30 million as a farewell gift from his former employer , an oil drilling supply company that will benefit nicely from the White House energy policy calling for more oil drilling , doesn't have to pay his own power bill.

Congress normally appropriates funds for the vice president's home energy bills, but no one expected to see a jump in costs like that seen in Cheney's bill. So the White House has decided to make the Navy , which owns the Washington Naval Observatory land on which the Veep's mansion is located , responsible for the entire bill.

Across the nation, our military personnel are working in dimmed offices to save energy costs. The conservation effort was supposed to help the Navy's tightened budget; now we know it was really to help keep the vice president's nightlight lit all day long.

Cheney, along with his running mate, George W., originally maintained the energy crisis was confined to California, the result of bad legislation. They ignored energy analysts' warnings issued as early as 1997 that a crisis would occur first in California and spread across the nation due to federal energy deregulatory laws.

The administration has backtracked from those early claims, but only because California Republicans are worried about a voter backlash come election time.

Unfortunately, there are those who still want to believe that California's energy woes are of its own making. A recent study issued by the UCLA Anderson School of Business does just that.

The study , if you can call it that , is a thinly disguised diatribe against government intervention in the energy market produced by Cambridge Energy Research Associates (CERA), an East Coast energy consulting firm. It compares the economic impacts of government intervention , including price controls , and letting the free market right itself.

Considering CERA makes a substantial amount of its revenue from the energy industry, it's not surprising its study comes out heavily in favor of the latter.

Unfortunately, the study is highly flawed, being based on the same kind of false assumptions that the energy industry has been peddling. In fact, its authors admitted to the San Francisco Chronicle its findings were based on using a worst-case scenario for its government-intervention study and a best-case scenario for its free-market study. That's the economic version of comparing apples to kiwi fruit.

The study assumes up front Californians have always been paying too little for electricity, pointing out the state's per capita annual expenses for power were $100 below the national average.

What they overlook, however, is the fact Californians have historically paid far more per kilowatt hour than the rest of the nation. The state's excessively high energy costs , due largely to poor decision-making by private utility executives , was the impetus for the state's decision to deregulate electricity to lower energy costs.

That Californians were forced by these long-time high costs to embrace energy conservation decades ago , along with the state's fair weather , is the reason our per capita expenditures are lower than the national average, and the reason cited by the state's utilities just a few years ago for not needing to build any new power plants.

The study's authors also take as fact the energy-industry inspired assumption price controls will prevent consumers from conserving electricity. This flies in the face of the fact Californians have reduced their energy consumption by 12 percent in the past year, even with state-mandated retail price controls. The reason is simple: Even with cost caps and long-term state-bought energy contracts, we are still paying excessively high prices for energy.

Some people argue we should shut up and pay whatever the market will bear , that's capitalism, the American way. I say there is no free market when the market is gamed and gouged and colluded out of existence.

If you don't believe it is, then ask yourself this: How is it Pacific Gas & Electric, while claiming bankruptcy in federal court, can come up with more than $17 million to give bonuses to its top executives , this on top of the $50 million in bonuses it paid out just before filing for protection?

How can San Diego Gas & Electric Co., all along claiming it makes no money selling electricity to customers, now say it will make $120 million this year from energy sales? This is on top of what its parent company, Sempra Energy, will make from its energy wholesale and trading subsidiary, Sempra Energy Trading.

Keep in mind that PG & E; and SDG & E;, along with Southern California Edison (also pleading near-insolvency), wrote California's deregulation law and pushed it through the state's Public Utilities Commission and Legislature with an expensive lobbying effort. They also bankrolled a political campaign that blocked an anti-deregulation ballot measure.

Meanwhile, the cost of doing business in California has skyrocketed due to price gouging by energy companies, with San Diego companies paying the most through the nose, according to a recent study by the Kosmont Cos. of Los Angeles.

Dick Cheney is right. Some people just don't get it. Perhaps if the vice president had to pay his own electricity bill, he'd start to get it , and at least start turning off the light when he leaves a room.

Hill is editor of the San Diego Business Journal.