SACRAMENTO – A top California utility official once quipped that he was one of the few executives in the country who earned a profit merely by remodeling his office. He was referring to the way the state’s regulated utility system is designed. Companies are granted an electricity monopoly for a particular region, then are guaranteed a hefty rate of return for the infrastructure investments they make.
This price system, critics say, results in unforeseen consequences. A recent investigative report found that California’s utility companies have been involved in a power-plant building spree, even though Californians have significantly cut their electricity usage over the same time period. In three years, the state is projected to be producing 21 percent more electricity than it needs, without counting the growth in rooftop-solar applications, reported the Los Angeles Times.
Last year, the California Independent System Operator had 24 percent in actual reserves – far above the targeted 15 percent goal. Even that 15 percent goal is 50 percent higher than what’s necessary to protect the system from disaster and blackouts, according to some experts.
View Article