Editor’s Note: California’s power problems have been in the news for many months now. Rolling blackouts have become common events. And President Bush — and the nation — are watching to see what is going to happen this summer.
Today, WorldNetDaily staff writer and talk-show host Geoff Metcalf interviews Sen. Tom McClintock, a California state legislator who has been warning of California’s energy problems for over a year. During this interview, Sen. McClintock discusses how his state got into the current power crisis, what lies ahead for the citizens of California, and what impact this crisis may yet have on the entire nation.
Metcalf’s daily streaming radio show can be heard on TalkNetDaily weekdays from 7 p.m. to 10 p.m. Eastern time.
Question: Senator, what the hell is going on in California?
Answer: The state is going to Hell in a hand-basket. I thought you figured that part out. According to the California ISO projections — the folks responsible for running the [electrical-power] grid — we’re looking at an entire summer of rolling blackouts. They’re predicting 34 days.
And, I had a group of analysts from the Association of California Water Agencies come through the other day and they say it could be as many as 84 days. It’s a dire situation and it is something that the governor cannot spin his way out of. It is a very simple problem: We have far more demand for electricity than we have a supply of electricity.
Q: OK, I’ll set you up. Why?
A: The reason for that is we have actively discouraged the construction of power plants for 27 years. It shouldn’t surprise anyone that we have finally run out of power.
Q: The Wall Street Journal, in a recent piece, suggests that Judge Montali might be the grown-up who can fix things. Is that doable?
A: Oh, absolutely. That should have been done back in January. The utilities should have reorganized under federal bankruptcy laws back in January and we would have saved the state $5.7 billion — that is what we have lost so far from the governor’s day-trading from the corner office.
Q: Montali is going to have some heavy clout with these people who we are reaching to — to sell us power now who didn’t last time — because he’s the guy who is going to say, “Hey, you guys want any part of your $14 billion? Well, I’ll tell you whether you’re going to get a penny on the dollar or fifty cents on the dollar.”
A: The credit of the utilities has to be restored. They lost their credit because we forced them to sell at losses of 500 percent or more — and it didn’t take more than a few months for them to have their credit ruined, their assets expended and to be on the edge of bankruptcy. The bankruptcy court exists to solve exactly that sort of problem. They can sort out the finances, satisfy the creditors, restore the credit of the company and put them back in business rapidly. That’s the whole point of the federal bankruptcy courts.
Instead, Gray Davis, to avoid the embarrassment — the political embarrassment of having a bankruptcy on his watch, when the utilities ran out of credit — he put the state in the power-buying business and that has now cost us over $5.7 billion that all of us are paying. That doesn’t protect us from any rate increases — it simply means that we are paying a small portion of those prices on our electricity bill and we’re paying a major portion on our tax bill.
Q: Even if — and it was doubtful before — Davis could have funded those $10 billion in bonds, in the wake of the recent Standard and Poors credit downgrading by two notches, the chances are probably slim to none. But let’s be generous and say the governor can come up with $10 billion — what happens when he runs out of that? And he is going to run out of it.
A: Then he comes back for more. That’s the way it has been since January when he put us in that position. “I just need a half of a billion dollars to get us through the next few days.” The legislature — to its dishonor — gave him that authority. He then came back and said, “Well, give me authority for another few days and, while you’re at it, why don’t you give me an ongoing authority — but, of course, I won’t need it.” That was AB 1X and the legislature granted him that authority and that’s how he’s chewed through over $5.7 billion.
Now, when we talk about a billion dollars at the state level, folks have got to understand what we really mean. Every billion dollars is $120 from an average family’s earnings. That’s how you get to a billion dollars at the state level. So, when we say he’s blown $5.7 billion day-trading in electricity, what we really mean is this: He has now chewed through $675 of the taxes paid by the average family in this state — every average family in this state. You might as well just add that to your electricity bill because that’s what you are actually paying for power.
Now what he’s saying is he’s going to borrow money to repay the General Fund, and guess who gets to pay that back?
Q: Every California taxpayer.
Q: You know that I don’t hold the place in which you work in very high regard?
A: (laughing) Word has leaked out …
Q: The obvious question is: Have we finally reached the point where maybe the petty, partisan bickering that just seems to be a staple in the bill mill — and the blaming that goes on all the time — are we yet at the point where you guys can set aside the potential for partisan advantage and positioning and just try to fix the problem?
A: Understand, there is a fundamental difference of opinion in the state legislature on how to handle this problem. Republicans look at this and say: “We have been actively discouraging power-plant construction for 27 years. Why is anybody surprised the day has finally arrived when we ran out of power?”
The Republicans begged the governor to call a special session last summer to begin a crash program of power-plant construction — when we barely had enough time to bring those units on line before the summer of 2001 struck. And he did nothing! That’s because the Democrats simply take a contrary view of the crisis.
Q: What, pray tell, is that?
A: Their view is that this is a matter of gaming the market — all we have to do is cut back on our power consumption and everything will be fine.
Q: Senator, we are way beyond “it’s our team against their team.”
A: Geoff, I understand that, but my point is this: We don’t have a majority. All we can do is point the way to a better future. The democratic majority — which can enact any legislation they wish — has simply taken the position that we don’t have to move Heaven and earth to build more power plants.
Q: Forget the philosophical differences that are carved in granite. Senate President Pro Tem Burton and the knuckle-dragging liberals on the left — they have to be realist politicians …
A: Geoff, they are not. I’ll give you an example. I just came from a committee and I had the most modest conceivable measure you can imagine. It simply said this: Any stage-three emergency — that’s the time when we are in imminent threat of blackouts — I mean, they can begin at any moment — we will grant permission to use back-up generators if they are the cleanest diesel generators that are approved by the Cal EPA. The newest, cleanest generators you can possibly acquire — it’s OK to run those in a stage-three emergency. And that bill has gone down.
Now, if we can’t get permission from the state legislature to run the cleanest generators that we have on the market today in a stage-three emergency — when blackouts are imminent — how are we ever going to address this problem? That’s the attitude in the state legislature today. And people have to understand they have to be very careful when they are voting on these people because you end up with the results we are living with now.
Q: Do you guys realize that in August, after the governor has whizzed away all the money and we are in almost constant — or at least routine — blackouts, that there is a very real prospect that there is going to be serious unrest in the streets of California?
A: When Chicago had a blackout in 1995, in the middle of a heat wave, 700 people died. We’re not talking about one blackout — we’re talking about a summer of them. And we’re not talking about one city — we’re talking about the entire state.
What we now have to come to grips with is the fact that it is too late — just as a physical matter of construction — to avert the crisis of the summer of 2001. As a policy matter, what we are looking at is how to prevent it in 2002 and 2003. It takes a year to a year and half to build a natural gas-fired plant and, by the way, we can’t build many more of those because we are running out of natural gas. That’s why your home heating bill skyrocketed.
Q: Let me ask the ugly question that no one in the bill mill wants to utter. It’s like saying a bad word in church. What about nuclear?
A: That is the only long-term solution to our problems. We need 15,000 megawatts of additional power as quickly as possible to fill the production gap we currently suffer, to produce enough of a surplus to bring prices back down and to guard against the unforeseen breakdowns in this state’s aging fleet of power plants. We can’t get there — or anywhere close to it — without nuclear. We have already strained our natural gas supply to the breaking point.
Q: I just raised the dirty word, “nuclear.”
A: Actually it’s a very clean word. It’s the cleanest form of generation we have.
Q: And the safest, by the way. Is this going to get any traction at all?
A: Well, it has to. Again, there is no alternative to it. We’ve run out of natural gas supplies — we’re really at the breaking point on our supply of that, and that is all that we’re building now. The few plants that we are building or have under consideration are gas.
People say we can just go solar. Unfortunately, solar is not a source of abundant energy. To give you an example, if you wanted to replace the daily electricity output of the Diablo Canyon Nuclear Power Plant, you would need a solar panel 36 square miles in surface area.
Q: Now don’t go confusing these people with facts that contradict their preconceived opinion. They don’t like nuclear — they like solar.
A: Listen, this is something we’ve got to come to grips with. By the way, the cost of that 36-square-mile solar panel would be about $66 billion dollars — that’s enough for 11 Diablo Canyon-size nuclear plants at current prices.
Q: I recently heard that the state is getting ready to spend something like four or five times more than it cost to build, to close Rancho Seco nuclear-power plant in Sacramento.
A: That wouldn’t surprise me. By the way, Rancho Seco, the plant in Sacramento, was shut down — not because of any operating problems — but because of ideological opposition. Strictly ideological.
Q: And, frankly, since that was built, the technology has gotten a lot better. The French generate something like 80 percent of their energy needs with nuclear.
A: Vermont gets 75 percent of its power from nuclear. And you’re seeing a renaissance of nuclear production around the world. Why? Because it is very, very safe. And, it is very cheap — about three cents per kilowatt-hour, after you have included both the construction costs and the decommissioning costs — about 3-cents per kilowatt-hour.
That’s the price of burning coal — which is the other very cheap source of energy. The difference is, coal is highly polluting and nuclear energy releases exactly zero emissions into the air. In fact, we’ve only got two nuclear plants in this state, left over from the days when this state’s leadership was committed to cheap, clean and abundant energy. But those two plants alone are still producing 16 percent of the needs of this state. And, because they are producing power — instead of conventional fossil plants — each year, we save about 181,000 tons of sulfur dioxide from being spewed into the atmosphere and we save about 7.7 million tons of carbon particulates from being spewed into the atmosphere, just because of those two nuclear plants alone.
When you hear the self-proclaimed environmental movement opposing nuclear energy, they are not doing the environment any favors. Nuclear energy is the cleanest source of mass-produced cheap energy that we can possibly find. And, how do they think we’re going to get the electricity to run the electric cars and the electric trains without a sizeable new commitment to nuclear power?
Q: Allegedly, one of the concerns the governor had was that someone was going to come up with some kind of ballot initiative. What the heck kind of ballot initiative can you come up with? We need more plants!
A: That’s exactly it. I mean, no matter how you spin it, the bottom-line, it is very simple — we do not have enough generating capacity. And, you know, there is nothing mysterious or nefarious about the price increases we are suffering. When any commodity — anything — is scarce, it is expensive. When it is plentiful it is cheap. To make electricity cheap, we have to make it plentiful. To make it plentiful, we’ve got to build a lot more power plants. And, again, the only source that we have that can provide cheap, clean and abundant power is nuclear energy. We can do about 5,000 megawatts of additional hydroelectric if we complete the Auburn Dam, build the Yellowjacket Dam on the Eel River, raise the Shasta Dam …
Q: Yeah, but all these things you’re talking about take time. The reality check that no one seems to want to admit — most certainly none of your colleagues in the bill mill — is that this is going to be a miserable summer in California and next summer is going to be probably as bad. The stuff that is being built — Calpine et al — it’s 2003 before they are up and fully operational.
A: Geoff, you are exactly right. And this is the bitter truth of the matter: A lot of people are going to die because of this. We saw 700 people die in a single blackout in Chicago in 1995 during a heat wave. On top of that, the amount of economic damage that idling 6,000 megawatts of commerce means is awesome — particularly at a time when the economy is buckling anyway. The thing that absolutely shocked me — I mean, having been here for 18 years, I thought I had seen it all — but when we have a bill that simply says that in a stage-three emergency and blackouts are imminent, it’s OK to run the cleanest backup generators that are currently available on the market today and we couldn’t even get that through its first committee; that is bizarre. The detachment from reality in this building is awesome.
Q: Ultimately, you know what is going to happen. It’s going to be like the Volstead Act all over again. If they have them, people are going to run them anyway regardless of what you guys do or don’t legislate.
A: Oh, yeah. The only good news in any of this is that, by the time we have been dragged through the summer, Cal ISO is predicting we’re going to emerge on the other side a sadder but a wiser state. And, I think, that then a lot of this left-wing extremism that you now see in every part of public policy is going to go through a radical reexamination.
Q: The reality check is here. We are already hearing from people who fear energy bills rivaling their mortgages. That is going to end up driving people out of the state. Some people will say that’s good — because if more people leave, there won’t be as much of a demand. However, when they leave, they take with them their tax revenue and it will impact negatively on the state.
A: We are already seeing that. We have had the slowest rate of population growth in our state’s entire history in California. That was something that shocked me. When you look around at traffic congestion, and the electricity shortages, and the impending water shortages, and the housing shortage and you get the feeling that we are being overwhelmed by population.
No, the problem is we stopped building those things 27 years ago and people kept coming to California in the 70s and 80s. And, now, we’re getting pushed over the edge. But the fact of the matter is that population growth now has slowed dramatically — which was the objective of the environmental extremists. The problem is the only way to stop people from coming to California is to make California a very undesirable place to live.
If you look at Nevada — right across the state line — they’ve had 60 percent population growth. Which leads me to the inescapable conclusion that people are finding a better life in the middle of the Nevada desert than they are able to find here in California.
Q: Senator, don’t your colleagues realize that eventually in the very near future there is going to be some payback? I mean constituents are only going to put up with this for so long before the voters rebel.
A: I think they have been conditioned to follow the pied piper of the Sierra Club for so long. No, I don’t think they recognize the severity of the crisis.
Q: Well, they are about to.
A: I’m afraid we are all about to. If the Cal ISO predictions are anywhere close to being true, it is going to be a miserable summer. We are going to have people dying as a result and the frustrating thing is, at this juncture — even if we took emergency measures right now to begin a crash program of power-plant construction — there is no time to avert the crisis for this summer. As I said, it takes a year to a year-and a-half to build a gas-fired plant. It takes four years to build a nuclear plant — and that’s once the government gets out of the way.
Q: Some folks, who observe that demand for electricity only went up 3 percent from last year, fail to recognize that the utilities got hit with a 289 percent increase in their cost to buy power.
A: Don’t forget a drought struck the Pacific Northwest. We were importing 8,000 megawatts of power from hydroelectric dams in the Pacific Northwest. When they ran out of water, they also naturally ran out of power. That’s what finally put California over the edge.
Q: Senator, the weather didn’t put California over the edge — bad legislation and lousy state management put us over the edge.
A: The point I keep trying to impress on people is the high prices are not a mystery. When anything is scarce, it is expensive. When it’s plentiful, it is cheap. If you want to bring down the price of electricity, the only genuine way to do that is to increase the supply. And that is the one thing this administration is unwilling to do. We have a fraction of the power-plant applications as are pending in states like Texas, that actively welcome power plant construction. We have a governor who right now has the authority under the Emergency Services Act to waive every regulation that stands in the way of power-plant construction. It is the same authority that Pete Wilson used to rebuild the Santa Monica Freeway.
Q: So why didn’t that happen in December?
A: You’ll have to ask the governor that. I don’t have an answer for that one. I don’t understand why he didn’t use that in December. I don’t know why he refused to call a special session a year ago when we begged him to do so — to begin that crash program of power-plant construction. I don’t know.
In December, when he was turning off the Christmas-tree lights at the capitol and telling us all to turn off our Christmas decorations, we had 2,600 megawatts of power that was sitting off-line solely because they had run out air pollution credits for the year and had to wait until January first to restart. The governor could have waived those regulations and he didn’t.
About the same time, Bruce Babbit, secretary of the Interior under the Clinton administration, happily announced he was diverting enough water on the Trinity River away from electricity production that could have produced electricity for 350,000 homes. And the governor of the state of California didn’t utter a peep of protest.
A: I don’t think he’s in touch with reality.
Q: People are going to die because of the energy myopia. Back east, they have old people die in tenement buildings in the heat. In California — where people think they have a constitutional right to air conditioning — this is going to be terrible this summer.
A: We had a group of developmentally-disabled people come in and point out their lives depend on stable electricity. Some of them are on respirators, others of them can only communicate over computers — you begin to realize the very grave danger this crisis has placed us in. And it all comes back to the fact that we are not building the power plants that we need.
Q: With the prediction from ISO and the increasingly annoying reality of this mess, the refrain question is: Does anybody in a position of authority have a clue?
A: Well, business seems to go on. The same lackadaisical attitude continues. When we can’t get a reasonable bill to authorize use of the cleanest diesel generators during a stage-three emergency, you realize there is a complete disconnect with reality in the state capitol. I think that if this summer is anywhere close to what the Cal ISO predicts there is going to be a seachange — if not inside the capitol, there certainly is going to be outside the capitol. Dr. Johnson once said, “When a man is to be hanged in the morning, it concentrates his attention remarkably.” This state is about to be hanged and I think we are going to see the citizens of California begin to pay very close attention to what is going on in their name in Sacramento.
Q: Two independent sources say it is going to cost $150 million per day — each day. Even if he could have — and I frankly don’t think he can still fund those $10 billion in bonds — let’s say he does get the $10 billion. Do the math: You’ll run out of money by July.
A: Oh yeah! In fact there is some question right now if we can even get a bridge loan to keep that money flowing. And again, that’s money right now that’s coming directly out of the General Fund — which means your taxes, which means when you sat down to fill out your income taxes to send them to the state, at this point, the first $675 of an average family’s taxes simply went to cover the electricity loss. And you are either going to continue to see those on your tax bill or they are going to have a bond measure. And to repay the bond measure you are going have a major surcharge on your electricity bill for years to come.
Q: People sitting in their homes can figure out real fast when it gets hot that all we have to do is build more plants and build them fast. Damn the torpedoes, full speed ahead, blow out those environmental restrictions — just get the plants up and cooking and then you can talk about mitigation, after the fact. How long is it going to take the people in that Never-Never Land that you reside in to realize the realities?
A: There are a lot of them here right now who I don’t think ever will recognize the realities. They are so steeped in this Jerry Brown era of small-is-beautiful, era of limits. New Age, no-growth nonsense — I don’t think they ever will. The question is if the electorate will, and I believe the answer is yes. They will begin to focus on this crisis very, very clearly in the near future and, at that point, you are going to see some changes in the membership in the state capitol.
Q: Back in January I heard from a woman who was incensed that President Bush wouldn’t solve the problem. I told her that despite my being a California resident, the president is right when he says the problem was caused by California and it’s incumbent on California to solve the problem. However, there are some unintended consequences. If California totally soils the sheets — as seems to be inevitable — there is a danger that we could impact the national power grid. At that point, there is a possibility the administration would be forced to do something nationally.
A: Well, early on in his administration, President Bush offered to work with the state to ease the immediate environmental regulations that are impeding our ability to deliver electricity and Gray Davis blew him off. What he wants is price caps. The problem with price caps is they create shortages. If price caps are imposed, we will have more blackouts and longer blackouts. That has been the experience with price caps since they were first imposed by the Emperor Diocletian in ancient Rome and they haven’t changed any.
Q: That’s how we got into this mess to begin with!
A: Yeah. Price caps create shortages. Price caps, in the case of electricity, prolong blackouts. I think what Davis is doing is reading the polls and, right now, people are saying they would prefer subsidized prices to blackouts. That’s only because they haven’t been through the summer yet. I think when people start dying for lack of electricity, there will be a completely different attitude among the electorate and I think then, Gray Davis is going to have a lot to answer for.
Q: What can California residents do before they start thinking about lynching politicians?
A: What Frederick Douglas once told a prot?g?: “Agitate, agitate agitate.” Call in to local talk shows, write letters to the editor and take the time to familiarize yourself with the issues that are involved — because they are going to directly affect your business, your employment, your paycheck and ultimately your loved ones because if the electricity goes out in the middle of heat wave, people do die.