Month: May 2001

Q&A: The Power Crisis

Q: I’ve been hearing everywhere that our main problem is lack of supply. Do we really need to build more power plants?

A: No. There are enough power plants being built right now. In fact, the plants scheduled to come on line in the next year could provide enough power to run half the homes in the US. The problem is not lack of supply, because nationwide we have more than enough energy production; the problem is how that supply is being distributed.

Q: What do you mean by that? I’ve heard that we need more power lines built, but that’s not what’s causing the California blackouts, right?

A: Building more power lines is only one part of the distribution problem. Approximately 72% of power-generating plants and utilities are privately owned, while about 28-29% are publicly owned. Prior to 1992, when Congress passed an act to privatize electrical utilities, the majority were publicly owned. Once the act was passed, utilities around the nation stopped building new power lines, because it wasn’t clear who would be owning and operating the transmission lines. It didn’t make sense for them to spend the money or go into debt to build more lines when Congress could pass amendments to the act or state governments could pass bills that would require public utilities to sell off their transmission lines to private bidders. At least one of California’s rolling blackouts has been caused by aging transmission lines–there was more than enough power to distribute, but the lines simply couldn’t handle it all.

The other half of the distribution problem is this: private companies have a control over the wholesale power market and have driven prices to astronomical heights. Public utilities that still own power plants or have long-term contracts with power generators are able to provide their customers with cheap power, which is why southern California is not being effected by the blackouts as badly as San Francisco and northern California (whose utilities have to buy all of their power on the wholesale markets).

This is a distribution problem, not a supply problem. There’s plenty of power–more than enough to go around–it’s just that most of it is owned by private companies that want to squeeze as much profit out of it as they can. This is how the free market works, and no one should be surprised.

Q: But won’t the construction of new power plants, which will increase competition as new companies jump into the market, eventually drive the price down?

A: Yes and no. So many new plants will be coming on line this year that commodities investors and analysts are beginning to worry about an oversupply or glut of power. This will, in theory, drive down the cost of wholesale power eventually. But this is only one part of what will happen. Right now companies are going into debt to build new plants; when power prices drop and they can’t make a big enough profit to pay shareholders and pay off their debt, they’ll go bankrupt, and these power plants will go off line again, eventually causing a shortage of power and making prices rise again, and so on and so on. This is often euphemistically referred to as “the business cycle.” It’s how free markets operate in the absence of regulation, and we shouldn’t be surprised.

Q: But the price will eventually go down, right? So the market does work if we give it enough time.

A: No. Even when prices have fallen, we will still be paying higher prices because of hidden costs. For example, in California right now Gov. Gray Davis is paying for power through a huge bond issue. He’s literally charging up the state’s credit card to keep the lights on. This will have two, drastic, long-term effects on California’s finances.

First, it will mean that the state will have less money to pay for running day-to-day state services and less money for schools, roads, cops, and services for the poor, disabled, and children (who tend to suffer most from budget cuts). Why? Because the state will be paying out more money in interest and principal on all that debt.

Secondly, the state has a limit on its borrowing capacity. When a large portion of that capacity is tied up in bonds to pay for electricity, there’s less left over to pay for infrastructure like new schools, road construction, transit, new state-owned power plants, etc. The people of California will be paying too much for electricity for decades in the future, regardless of what happens to wholesale electric prices within the next year.

Finally, there’s a final cost to the public that no one is discussing. Our economy is in a recession and corporate profits are low or, in many cases, in negative territory. As companies deal with higher utility rates, they pass those on to customers where they can. That’s another hidden cost. Furthermore, when companies have to deal with rolling blackouts, they begin to look elsewhere for cheaper, readily available power. For example, many companies will use the blackouts in California as an excuse to desert the state and head for Mexico or points overseas. In Washington and Oregon, power-dependent aluminum plants have already closed down and laid off their workers indefinitely; you can bet their executives are looking overseas for cheaper power supplies … and cheaper labor.

Q: So what about Bush’s new energy plan? Won’t it address the problems in California and the rest of the West?

A: No. There’s not a single point in the Bush plan that addresses the current problems with the wholesale power market. By the way, it’s not fair to call this the “Bush plan,” since it was Dick Cheney’s task force that drew it up, and Bush seems to know nothing about how either the energy market works or how free markets function in general (we know this from his meetings with Alan Greenspan).

The Cheney plan is primarily a blueprint for dismantling environmental regulations in favor of oil and gas companies. It also contains initiatives to revive the nuclear power industry and to allow drilling for oil and gas on all federal lands, including the Arctic National Wildlife Refuge. While these proposals would have to pass through Congress to be enacted into law, remember that the Republicans have already converted a number of “moderate” Democrats to vote for the Bush budget and tax cut plan, the most offensive piece of fiscal legislation in a decade.

We can’t sit back and expect Democrats in Congress to fight these bills; they’ll cave in to wealthy business interests. If we let them. We need to put enough of the right kind of pressure on them to make them afraid to despoil the environment or build new nuclear power plants. Writing letters to your senators won’t do it, giving money to the Sierra Club won’t do it. Only direct action–getting out in the street–can send the message clearly.

One Planet – May 9, 2001

Turkey: On Strike Against Torture

Turkey has some of the most brutal prisons in Europe. Prisoners are often tortured and mistreated and denied visits from family and friends. In the past five years, 28 prisoners have been killed by prison staff and security forces.

In addition, Turkish prisons are filled with political prisoners and prisoners of conscience: Kurdish nationalists, labor union organizers, journalists and press people, and left-wing organizers, many of whom are young students jailed under Turkey’s vague “terrorism law” for the crimes of passing out leaflets or shouting slogans in the street.

Until last year, Turkish prisons were based on a ward model–up to 60 prisoners housed together in the same dormitory-style building. This allowed prisoners jailed because of their political beliefs to band together and find support against the deprivation of prison life and resist attempts by prison guards to brainwash them or break their beliefs.

It also made it easier for prisoners to send and receive messages from friends, family, and colleagues outside, and for political groups on the outside to keep track of their members who had been jailed. No one could simply disappear without anyone knowing what had happened, as it was difficult for prison guards to isolate any one prisoner from the wards.

This was a problem for the Turkish penal system and the Turkish government. Occasionally, the government would lean on prison guards to minimize the communication between left-wing prisoners and the outside world. Guards and police would then invade a ward to “regain control” and the ensuing massacre would elicit an international outcry from human rights monitors. During the last such invasion, in the Ulucanlar Prison in Ankara in 1999, police beat 10 prisoners to death.

When Turkey was placed on the track to join the European Union, its prison system entered the regional spotlight. The Turkish government was under pressure to do something about its appalling human rights record. With the help of western consultants, Turkey undertook a modernization plan and began to build new prisons.

The new prisons are based on a design called the “F-type.” Instead of large wards, the new prisons consist of small one to three person, windowless cells. Unlike the international standard, however, the new Turkish prisons contain no group facilities at all: no mess rooms, no exercise yards, and no work facilities.

Last year political prisoners were moved into the first of the new prisons, the Kartal Special Type Prison. In violation of human rights standards, prisoners at Kartal were being held in isolation without access to sunlight or visitors for 24 hours a day, 7 days a week. International standards recommend that prisoners spend at least 8 hours per day outside of their cells engaged in meaningful activity.

In response, over 300 prisoners and their supporters on the outside began a hunger strike late last year to call attention to the inhumane conditions in the new prisons. Instead of addressing their concerns and bringing the new prisons up to international standards, the Turkish government sent in troops to try and break the hunger strike. For four days in mid-December, armed soldiers invaded 20 prisons to break the nonviolent strike and transfer left-wing prisoners to the new isolation cells. Prisoners reported deliberate killings, torture, and rape of both male and female prisoners. In all, 30 prisoners and 2 soldiers were killed in the operation.

The prisoners were moved into the new prisons and immediately isolated. At Edirne, Kandira, Sincan, and Tekirdag prisons, prisoners were only allowed to leave their cells once a week, and only if a close relative visited them. They were refused access to other visitors, to each other, and to their lawyers.

Nevertheless, the hunger strike continued. In March and April, as the government refused to back down, strikers began to die from malnutrition. More prisoners and their relatives and friends joined the hunger strike.

As of this writing, over 800 people are on strike, and 20 people have died. Amnesty International, Human Rights Watch, and the Council of Europe have all condemned the Turkish government’s prison policy.

Human Rights Watch reports: “Paradoxically, the persistence of isolation contradicts the Turkish government’s own stated policy. Prior to the December operation, the Turkish Justice Minister stated that the new F-type prisons would not be opened until legislation was in place to ensure a humane regime. The minister now refuses to implement those reforms unless prisoners abandon their protest hunger strikes.”

The Big Squish

Last week, Gov. Gary Locke finally announced his transportation plan. It’s about time.

When I-695 passed a year and a half ago, folks urged Locke to develop a transportation plan to replace money for road improvements and transit funding. Locke deferred to the Legislature, which was a bad move. Democrats and Republicans ignored the problem. The most they could come up with was The Blue Ribbon Commission on Transportation; in other words, they spent a bunch of money to study the problem (as if we didn’t already know what the problem was).

After the Legislature fell down on the job, Locke was urged to draft a plan to put before the voters at the November election. Oh, no, Gov. Jellyfish replied. First we must wait for the report from The Blue Ribbon Commission on Transportation.

Who were these people Gov. Squish trusted so much? The commission members were primarily politicians and people who have a vested interest in road construction. They included: Doug Beighle (Boeing), John Kelly (Alaska Airlines), John Rindlaub (Bank of America), Bruce Anderson (Supervalue, Inc.), Doug Hurley (CH2M Hill), Robert M. Helsell (Wilder Construction Co.), Peter Bennett (K Line America), Roger Dormaier (Wheat Growers Association), Larry Pursley (State Trucking Association), Karen Schmidt (Freight Mobility Board), and Ted Bottinger (WA Public Ports Association). I guess the rest of us were supposed to be represented by Aaron Ostrom (1000 Friends of Washington, a former city council candidate now supporting Paul Schell’s re-election) and Randy Scott (Association of WA Tribes).

Naturally, the commission’s final report reflected the commission’s bias towards road building, “simplifying the permit process” (i.e., eliminating all those inconvenient environmental laws), and privatizing the public transportation system as much as possible. The commission’s conclusions boiled down to two things: 1) an estimate of how much money would be needed to upgrade roads and bridges in the state, and 2) some recommendations on how to fund these projects.

As soon as the report was released in December, folks again urged Gov. Jellyfish to draw up a plan and present it to the Legislature. Again, he demurred. He had easily won reelection, the State Senate was controlled by Democrats, and the 50-50 split in the House could have been overcome with a bit of lobbying. Locke had the chance, but he squished out.

Now the Legislature has just wrapped up its most unproductive session in history without even passing a state budget (much less drafting a transportation plan), and Gov. Locke finally trots one out, almost two years too late. The Legislature is just beginning its 30-day special session and its attention is focused on the budget. Maybe we’ll get a transportation bill. Maybe.

It won’t be a very good one, if Gov. Locke’s plan is the model.

For one thing, it’s all funding for road maintenance and improvements, particularly for adding extra freeway lanes and HOV lanes on I-5, I-405, SR-167, and a few other highways. The real problem is that Gov. Locke’s $9.3 billion plan will only fund a little more than half of the cost of these projects; the other $7.8 billion relies on local funding.

A closer look at where the funds will come from is disturbing. About half of the state funds will come from taxes on users: $2 billion from sales taxes on new and used vehicles, $2.2 billion from a 7 cent increase in the gas tax, and $600 million from a weight surcharge on trucks. That’s all fine, with the possible exception of the gas tax–it’s not indexed to inflation, so it will have to be increased again, and again, and again.

However, the other half of the state funds comes from issuing bonds worth $5 billion. About 28% of that $5 billion will eventually have to be paid back out to bondholders and banks in the form of interest and fees ($1.4 billion), making this a great scheme for investors and the banks that will finance the bond issues.

A look at where the local funds will come from is even worse. Most will come from sales taxes ($3.7 billion). Another $1.3 billion will come from a 0.1% increase in business taxes, and a measly $840 million will come from taxes on users (a local option vehicle tax and local option gas tax). This means that people who don’t even own a car (like me) will be paying for the roads.

The local funding also assumes that cities and counties will issue $1 billion in bonds, and 36% of that money ($359 million) will be paid back to investors and bankers.

Gov. Squish’s plan includes a list of projects to be funded. On this list are five projects that will suck up the bulk of the money. None of them have been through the complete design process–all remain undefined and none have a complete Environmental Impact Statement. They are: replacing the Alaskan Way Viaduct, designing and building a new SR-167 corridor (Renton to Tacoma), new lanes on I-405 from Tukwila to Lynnwood (i.e., expanding the whole damn freeway), a new alignment for SR-509 in SeaTac, and replacing the 520 bridge.

Without complete designs for these projects, cost estimates are only wild guesses. The state funds Locke would allocate for these projects are minuscule compared to the local funds he allocates for them. For example, Locke’s plan devotes $290 million to the Alaska Way Viaduct, but somehow the City of Seattle has to come up with $710 million to finish the project. That’s nothing compared to the I-405 expansion, which Locke wants to fund with $520 million in state money, while asking the greater Seattle metropolitan region to cough up $3.1 billion.

And you thought Sound Transit was a ripoff!

Powered by WordPress & Theme by Anders Norén