California and New York Having Problems Delivering Energy

Repeatedly this month in California, Pacific Gas & Electric has cut off electricity to more than a million subscribers due to high winds and dry conditions that could cause a fire on its lines. In New York, National Grid has placed a moratorium on new natural gas hook ups because there is insufficient pipeline infrastructure to bring natural gas to homes and businesses. In both these cases, state politicians are mostly to blame, but they refuse to accept responsibility for the failures.

California

In early October, Pacific Gas & Electric instituted a fire-prevention power outage—California’s largest-ever “public safety power shutoff.” PG&E’s phased outages across more than 30 Northern California counties affected over 2 million people covering several days. PG&E warned its customers that it would cut power when there are sustained winds of 25 miles an hour and gusts of 45 miles an hour. Once winds subside, it would then need to inspect equipment before restoring power. But again in the final week of the month, a similar situation unfolded with high winds and more shutoffs.

Uncomfortable with the response from subscribers who were cut off from power, California’s Governor Newsom proposed the utility pay as many as 738,000 customers who lost power an automatic rebate of $100 per residential customer and $250 per business customer as “compensation for their hardships,” and ordered the California Public Utility Commission to investigate.

PG&E is blamed for two dozen or so wildfires in the past few years and under state law is responsible for tens of billions of dollars in damages, which forced the company to file for bankruptcy earlier this year. For years, the state made the utility spend billions on wind and solar power and electric-car subsidies when it should have been inspecting and clearing lines. Credit Suisse estimated that the utility’s long-term contracts with renewable developers cost the utility $2.2 billion annually above current market power rates.

California’s residential electricity rates are the third highest in the continental United States at almost 21 cents per kilowatt-hour. But, for PG&E to inspect all of its 100,000 or so miles of power lines and clear downed or intrusive trees would require rates to increase by over 400 percent. Insurance rates for tree trimmers have also increased due to California’s litigation-friendly laws, making it hard to find workers, whose numbers have already been decimated by decades of anti-forest management policies in the state. Opposition to logging and prescribed burns in California’s forests has resulted in 147 million dead trees that make for combustible fuel under dry conditions, and there are fewer people in the business of cutting wood, which is contributing to the problem.

New York

Governor Cuomo of New York will not allow permits to build natural gas pipelines from Pennsylvania into the Empire State to bring much needed natural gas for heating, electric generation, and industrial uses. Besides barring new pipeline infrastructure, the state has banned hydraulic fracturing in the state, thus not allowing for its own natural gas deposits to be produced which are just over the border from Pennsylvania’s booming Marcellus operations. As a result, two of the state’s natural gas utilities have had to place a ban on new hook ups, causing a protest from the state’s constituents, particularly those in the process of refurbishment and procuring natural gas technology before the ban went into effect. National Grid, for example, rejected more than 2,600 applications for natural gas service to 20,000 commercial and residential units in Brooklyn, Queens, and Long Island since mid-May.

Rather than face his own follies, Governor Cuomo ordered the state Public Utility Commission to institute millions of dollars in penalties unless National Grid agreed to provide natural gas hookups to more than a 1,100 New York customers that had been denied service by mid-November.

According to National Grid, to meet the extra demand, the state must reverse its rejection of the nearly $1 billion natural gas pipeline—the Northeast Expansion Project–that would stretch from Pennsylvania to Rockaway Beach—a total of 24 miles. New York State rejected needed permits for the pipeline project twice, leading National Grid to enact the moratorium on all new requests for service earlier this year. The move has affected business and residential development projects and stopped thousands of conversions from fuel oil to natural gas that take place each year. Those trying to convert from heating oil to cleaner and cheaper natural gas are being denied access, resulting in more carbon dioxide and criteria pollutants being emitted in New York State.

The utility’s analysis indicates that there are very real gas supply constraints in the northeast and it is working to identify unprecedented temporary solutions to help mitigate this situation.

Conclusion

New York and California are at the forefront of denying energy to their consumers due to renewable mandates and subsidies, bans on hydraulic fracturing for natural gas production, and denying permits for natural gas pipelines. Due to these and other state laws and regulations, electric and natural gas utilities have been forced to deny or shut off service to their states’ residents and businesses. These states need to reassess their policies and programs unless they want to mimic Venezuela’s problems and harm their consumers further.

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