CAN NEW YORK AVOID CALIFORNIA'S BLACKOUTS? 
Monday,April 2,2001 
	
	By WILLIAM TUCKER 
	
	
WILL New York be able to avoid a California-type power shortage this summer? 
Right now, the odds look pretty good. A lot depends right now on whether 
Mayor Giuliani can keep his mouth shut. 
	Last week, the mayor departed from his Republican principles for a moment to 
advocate "temporary" price controls on wholesale electricity in the 
Northeast. 
	"The double-digit price increases that New Yorkers had to pay last summer are 
just unacceptable," said Giuliani at a press conference. "Deregulation should 
not be abandoned, it should be completed. The problem is when we deregulated 
we didn't think it would affect us so quickly. We need a little adjustment 
right now." 
	Ah yes, just a teeny-weenie little adjustment just to get us through the next 
few months, right? Just like rent control - a "temporary wartime measure" 
imposed in 1943. 
	Price controls are never temporary. They just make things worse by producing 
shortages. And the more shortages they produce, the more people agitate for 
more regulations. It's a vicious cycle that eventually becomes almost 
impossible to escape. 
	California is having blackouts right now because, until this week at least, 
the public and political officials were unwilling to accept a rate increase. 
(Before last week, Gov. Gray Davis' major power-conservation achievement was 
having "energy savings tips" printed on McDonald's placemats.) 
	Rate hikes do two essential things: 1) encourage people to conserve and 2) 
bring in more supply. That's exactly what's needed. Mayor Giuliani's price 
controls would only anaesthetize the public to the need for conservation and 
discourage supply - a perfect prescription for California-type blackouts. 
	What's even more important than avoiding rotating blackouts, however, is 
convincing people that environmental amenities don't come free. If everybody 
is going to oppose power plants in their neighborhood, then nobody is going 
to have enough electricity. 
	California got itself into its mess by refusing to build power plants over 
the last 20 years. The state didn't want nuclear (too dangerous), it didn't 
want coal (too dirty), so it formulated a make-believe strategy of 
"conservation and renewables." In fact, the Golden State has done a heroic 
job in both. California ranks dead last among the 50 states in per-capita 
electricity consumption. It also gets 12 percent of its energy from 
renewables (geothermal, windmills, biomass, solar electric) - as opposed to 1 
percent for the rest of the country. 
	Yet the state still finds itself woefully short of power. There isn't any 
substitute for large generating stations. Contrary to public opinion, 
electricity is not produced by sticking the plug in the wall. 
	New York faces the same long-range problems. The city has not built a new 
power plant since 1959. Nobody upstate wants power plants either. (They argue 
it would "reindustrialize the Hudson.") Right now, residents of Rockland 
County are furiously resisting a clean, new 600-mega- watt power station in 
an already industrialized area. Yet even building in Rockland won't help New 
York City, because nobody wants the transmission lines either. 
	The final verdict from the laws of supply-and-demand is simple. If demand 
goes up and supply doesn't respond, then prices will go up as well. 
	Even mainstream environmental groups now acknowledge this. "We're all in 
favor of building new gas generators," says Ashok Gupta, senior economist at 
the Natural Resources Defense Council, which is not opposing the 10 peaking 
generators proposed for the city. "The new plants are twice as efficient and 
much cleaner. Every time we build a clean, new gas plant, we back out two 
dirty older ones." The Sierra Club is also backing new natural-gas power 
plants in California. 
	What's needed is a system for compensating people who live in the immediate 
vicinity. There are dozens of possibilities. Property taxes could be lowered, 
people could be paid cash rewards or given free electricity. Many an upstate 
town and village lives comfortably with prisons or power plants because they 
lower property taxes and provide jobs for the community. 
	"We can have both adequate power and a clean environment," says Gupta, who 
lives and works in Manhattan. "The technology for improvements, both on 
supply and demand. The only thing lacking is consensus and leadership." It's 
a small price to pay for avoiding a California debacle. 
	
	
	
	
	

	
	

	
	RUDY'S ELECTRIC ERROR 
Monday,April 2,2001 
	
	
	
The energy crisis now building nationally is serious, but it's no cause for 
panic. Mayor Giuiliani, for one, needs to rethink a key element in his own 
approach to New York's incipient energy woes. 
	For sure, Hizzoner last week included some common-sense pronouncements in his 
prescription - such as forcefully telling the environmentalists and "not in 
my backyard" crowds that more energy-producing plants are essential if New 
York is to avoid a California-style crisis. 
	However, in one area, Mayor Giuliani is wrong: He wants energy price 
controls. 
	Yes, energy prices are going to spike in the near term. And it will be 
tempting to define the results as an "emergency" warranting government 
intervention. 
	But today's emergency becomes tomorrow's entitlement. 
	"Temporary" actions acquire constituencies that fight tooth and nail to keep 
them permanently in place. 
	For example, take rent control - please. 
	It was a wartime - World War II - provision instituted in 1943. 
	Two years later, the war ended. Fifty-eight years later, the "emergency" 
controls remain. 
	And affordable New York City apartments are nearly nonexistent. 
	The rent controls give landlords little incentive to maintain existing 
buildings. New construction goes only to pricey luxury apartments. Thus it 
has become nearly impossible for the middle-class to live in Manhattan. 
	If you like what rent control has wrought in the Big Apple's housing market, 
you'll love what price controls will do for the energy market. 
	Rudolph Giuliani's legacy is assured. It is undeniably a positive one - 
having, among other things, made the city safe and livable once again. 
	What a pity to tar that by being the mayor who saddled succeeding city 
leaders with price controls that would cause energy shortages far into the 
future.