About Power

May 21, 2001

Supervisor Beall,
Thank you for your letter of May 18, 2001 inviting your constituents' opinions on the California energy situation. Let me start by saying that I am a life-long Democrat, yet I am quite opposed to the positions and methods Governor Davis has employed in this "crisis". - In his first speech on the subject he seemed to throw the baby out with the bath water when he said that deregulation was a colossal failure. Yet other states seems to be doing fine with deregulation.

It also seems an ironic stance given the entrepreneurial and free-market orientation of the state and the general prosperity it has delivered in other markets.

- I think Davis is out of his mind to want to own the grid. Moreover, it is folly to have the utilities operate it once purchased.

- I think it is wrong-headed to have the state build power plants.

- In this ever increasingly connected world, to talk about California's need to be energy "self-sufficient" seems anachronistic. No state is an island. I feel strongly that we should look at our energy situation in at least a regional if not a national or international context.

- I am opposed to price controls and caps. However, I would agree to a similar mechanism to that of many adjustable rate mortgages, namely a cap on the monthly rate of increase. Indeed, even the stock market as controls on downward movement when the velocity leads to "irrational demoralization."

- I believe that California should continue to investigate how to get to deregulation in a less punishing manner.

- I have no fear of higher prices for energy as this will surely lead to conservation and the enhanced viability of alternative sources.

- It seems to me that we should be looking at smaller scale developments that are under local control. To me this means the dismantling of PG&E, SCE, and SDL&P and replacing them with MUDs such as the ones in LA, Palo Alto, and Sacramento. These seems to have done the best job at managing energy availability for their customers. Ironically, in many ways by using the free-market to buy power.

- The MUD idea also is in line with municipalities increasing need to ensure that all the elements for development are in the control of the city governments. Along with sewer, water, schools, roads and other resources that a city must ensure are available before development begins, should we not now add energy to the list?

I thank you for your attention.

Regards,

Marc Auerbach