Exclusively in the new print issue of CounterPunch
HOW MODERN MONEY WORKS — Economist Alan Nasser presents a slashing indictment of the vicious nature of finance capitalism; The Bio-Social Facts of American Capitalism: David Price excavates the racist anthropology of Earnest Hooten and his government allies; Is Zero-Tolerance Policing Worth More Chokehold Deaths? Martha Rosenberg and Robert Wilbur assay the deadly legacy of the Broken Windows theory of criminology; Gaming the White Man’s Money: Louis Proyect offers a short history of tribal casinos; Death by Incarceration: Troy Thomas reports from inside prison on the cruelty of life without parole sentences. Plus: Jeffrey St. Clair on how the murder of Michael Brown got lost in the media coverage; JoAnn Wypijewski on class warfare from Martinsburg to Ferguson; Mike Whitney on the coming stock market crash; Chris Floyd on DC’s Insane Clown Posse; Lee Ballinger on the warped nostalgia for the Alamo; and Nathaniel St. Clair on “Boyhood.”
Nature and Politics

Blackout Christmas

by Alexander Cockburn And Jeffrey St. Clair

It’s starting to shape up as possibly a dark Christmas in California. On December 6, a few moments after lighting the state Christmas tree, Governor Gray Davis pulled the plug. He announced piously that he was doing so to conserve energy and urged other Californians to do the same. “I would love to keep the lights on,” Davis proclaimed to a group of kids assembled at the capitol. “But I believe you shouldn’t ask anyone to sacrifice unless you’re willing to sacrifice yourself. I wish it didn’t have to happen.”

There’s an atmosphere of manufactured doom hovering over the state that resembles the blackout of London during the Blitz. Davis and the utility execs would have you believe that California energy supplies are frail as Callista Flockhart. They’ve even talked ominously about invoking a “Stage Three” emergency alert: rollling blackouts, light and heat rationing, and other impositions on residential neighborhoods.

Unlike the upper Midwest or Northeast, winter is not the peak power demand season for California and state regulators and officials appear to have been caught by surprise. That’s why the supposed shortages have the politicians and energy bureaucrats in such a frenzy of fingerpointing.

The head of the Independent System Operator, the overlord of the state’s power grid, has lamented the profusion of holiday lights, noting that the state Christmas tree alone gulps up as much power as 15 Bay Area homes. Others suggest that there were temporary glitches in a few power plants, repairs to improve air quality and a lack of rain for hydrodams. A Pacific Gas and Electric spokesperson sternly advises that people have their thermostats up too high.

The search for culprits is getting so desperate that now even dope growers are being tagged for the blame. Under this scenario, pot-farmers have been driven literally underground by the drug war, setting up indoor operations in their basements, illuminated by banks of grow lights that suck the western power grid dry. This theory bumps up against the inconvenient fact that up in the Emerald Triangle of southern Humboldt amd Mendocino counties the Bourdeaux region of the cannabis connoisseur, indoor marijuana production is an off-grid operation, powered by diesel-fueled generators or solar collectors.

But if indeed this turns out to be a Blackout Christmas, the California legislature has only itself to blame. The current power crunch is the entirely predictable result of the mad rush to deregulate the energy market, which the California political establishment has pushed for so remorselessly.

“This is a direct consequence of a wholesale market whose rules are in shambles,” says consumer advocate Michael Shames. He suggests that the power shortage has been manipulated by the energy producers. When supplies tighten, prices in a deregulated environment soar and the consumer both pays the price and takes the blame.

The real Christmas villlains here then are the big utilities and energy companies, ever ready to sock it to consumers at the most vulnerable time. The laissez-faire system is an invitation for market manipulation, price gouging, and bullying. This is the natural inclination of the energy giants. And it’s precisely why states and the federal government moved in the 1920s to control the mercenary instincts of this companies through a firm set of regulations. But over the last 25-years, these restraints have been steadily peeled away, starting with Jimmy Carter’s deregulation of the natural gas industry in the late 1970s.

In 1996, the California general assembly sneaked through an energy deregulation bill that stripped state regulators of much of their control over energy prices and services and paid off the utilities for their failed investments in nuclear plants few wanted in the first place. SoCal Edison and PG & E got their multi-billion bailout and almost immediately started gouging rate-payers. Now they and their apologists are blaming dope growers and Christmas. In fact, the more energy you need, the higher you must pay. Except, of course, for the big industrial consumers. They get cut-rate deals and the rest is passed on to the residential consumer. This is the inexorable logic of energy deregulation.

Before the California bill passed in 1996, environmentalists and consumer advocates warned that in a deregulated market where profit was the sole motive the reliability of the energy system would be placed at risk. It didn’t take long to prove them right. A summer of power outages and price surges has been followed by an autumn of plant closures and shortages. The energy producers are now asking for tax breaks and exemptions from environmental regulations to get their new plants on-line sooner. Governor Davis has already bowed to their wishes, ordering state regulators to expedite the permitting process for new power plants.

The deregulation craze has given birth to a whole new scheme of energy profiteering. The power grid now resembles nothing so much as the frenzy at the Chicago Board of Trade, with energy arbitrageurs buying up spot futures in southern California kilowatts. Enron, the natural gas conglomerate with close ties to the Bush team, has even opened a subsidiary that will buy and sell weather futures-a kind of Vegas-style bookie shop that will place bets on whether it will be a cold or moderate winter, whether El Nino or La Ni?a will come knocking again.

As California goes, so goes the nation. We are told repeatedly that the national energy transmission system is literally linked together in a giant web, a kind of Super String theory for electric lines. One shiver anywhere in the network will be felt by all. It’s also a convenient excuse, where rough winters in Buffalo can be blamed for rate hikes and shortages in San Diego or Seattle.

“California’s electricity supply and cost crisis is a metaphor for the economic and social disruptions most in the US should expect as the trade and technology globalization initiatives started by the Clinton Administration mature” says Larry Tuttle, director of the Center for Environmental Equity, an energy watchdog group in Portland, Oregon. With a recession looming ever closer, and people’s wallets likely to get thinner, the deregulation could become a political timebomb. CP

The Bush Affairs: a whole new meaning to triangulation