There is a morning ritual in the Wombat household. It begins with the Alarm Dance: Ms. Wombat's alarm buzzes. The snooze button is hit. Buzz. Snooze. Buzz. Snooze. There is an alternate choreography on days when she sets her alarm to play music instead of buzz: Music. I wake up. I wonder when she will hit snooze. She doesn't. She's asleep. I say, "hit the snooze button." Without waking, she does. I go back to sleep. Repeat every nine minutes for three-quarters of an hour.

But no matter which variation of the Alarm Dance we go through, it is always followed by the Chaos Dance: Ms. Wombat frantically dashes hither and thither through the apartment, with shouts of "where's my bag? No, not that bag. Not that one either. My black one. No, not that black one -- the other black one, the one with my wallet in it," "have you seen my shoes?" and "I hate my hair! I want to chop it all off!"

The Alarm Dance and the Chaos Dance are but preludes to The Question: "ARRRGHH!! Why am I always rushing around like this in the mornings??!?"

I have learned not to reply with the obvious, "maybe because you hit your snooze button five times." Down that path lies divorce. Or at least contusions.

This morning ritual puts me in mind of Fight Club and of California's energy problems.

There's this scene in Fight Club in which a bunch of urban terrorist wannabes are bemoaning the fact that some of them have been shot by a police officer. Ed Norton turns to them and yells, "You morons! You're running around in ski masks blowing things up! What did you think would happen??"

I heard a story on NPR this morning reporting that 60% of Californians don't think that there is an energy crisis, not really. After all, if a rolling blackout means you can't watch TV for a few hours or your ice cream melts ... certainly it's an inconvenience, but it hardly qualifies as a crisis. If you (a) own or work for a technology company that loses thousands of dollars every hour the power is out, or (b) you're dirt poor and can't afford to replace the groceries that go bad, then (a) ha ha ha on you ‘cause everybody loves it when The Man suffers or (b) who cares about the poor? This is the land of movie stars and dot-commers! Besides, they're probably just wetbacks, and who needs them?

This poll even went so far as to say that a lot of the aforementioned 60% think that there isn't even a power supply shortage at all; that the utility companies are obviously creating the thing out of whole cloth just to profiteer, so we should force them to turn the power back on and lower the rates to boot¹.

Regardless of what 60% of Californians think, right now the media are full of stories about the crisis and who's blaming whom for it. Politicians are running around happy as clams because now even an Assistant to the Deputy City Comptroller can get on the evening news just by saying, "something must be done." Lawyers are drooling and running around like jackals chasing a herd of bleeding wildebeests. It can be difficult to sort through things, what with all the sound and fury -- not to mention the Californians. But let's try anyway.

Most people are laying the blame on failed deregulation. Deregulate is defined by the American Heritage Dictionary as "to decontrol." Big help, guys, thanks². Look up decontrol and you get "to free from control, especially from governmental control." But that's not what California did. They switched one set of rules, regulations and price caps for a different one. That's reregulation, not deregulation. But politicians sold it as "deregulation" anyway. Whenever politicians are saying one thing and doing another, there's probably trouble ahead. (Remember the Strategic "Defense" Initiative and the "Savings" & Loan scandal?) So since we're looking for the cause of the problem, this might be a good start.

What are these new rules? Well, for one, consumer prices for electricity are capped. Here's another one: power carriers (the companies you pay to send juice down your power line) were forced to sell their generators. Here's another: long-term contracts were forbidden, leaving utilities no protection from sudden price jumps.

Now, throw into this mix the fact that environmental laws in California have closed almost all coal and nuclear-powered generating facilities, and have made building new power plants of any kind so expensive and difficult that it hasn't been done for about ten years.

So, where does that leave things? It leaves California with two sources of power generation: hydroelectricity and natural gas.

And as it happens, there was less rainfall than expected at the same time that natural gas supplies shrunk. Hydroelectric production can't be expanded without running lakes dry. The dearth of natural gas can't be made up for by burning more coal or fissioning more uranium.³ So, as the price of natural gas went up, the cost of generating electricity went up. And since the price at which electricity sells remains fixed, not only did the power carriers lose money on every kilowatt, but people have no financial incentive to reduce their consumption. And so the electric utilities are bleeding money like a hemophiliac with a head wound.

So now, the utilities are shutting down the power grids at high consumption times to stem the bleeding. To continue the gruesome head wound metaphor, that's like a doctor putting a clamp on the carotid artery -- it slows the bleeding, but it is at best a short-term solution. The credit rating of utilities has dropped to junk bond status, which is like the nurse saying, "doctor, the patient's blood pressure just hit 40/20." And politicians and lawyers are trying to force people to sell natural gas far below market value, which is like hooking up four people's arteries to the hemophiliac; he'll stay alive a little longer, but sooner or later you'll have five dead people instead of just one.

It doesn't take a Mensan to figure out that this is a recipe for disaster, but not only did Californians dream this facocktah mess up, 60% of them still have no problem with it. When this level of denial happens in a movie, we laugh. When it happens with one's wife as she's going through her morning routine, it's no big deal; the worst consequence is that she's a little frazzled and I have to walk the dog when it was her turn that morning.⁴ But when a whole state behaves this way in regards to something as important as electricity then it's a little scary.

OK. Now that we've identified the problem, how to deal with it? With my wife and her alarm, I will offer no solution. It's safer that way. As for California, there are two: completely regulate the industry, or really deregulate it.

Regulation

There are basically two arguments for regulation. The first one is stability. By regulating all the rates and prices, the State would endeavor to keep power as affordable as possible for as long as possible. Consumers are happy because rates stay predictable, and people like not being surprised by their electric bill. Utility companies are happy because there's no competition; everyone's market share is fixed and survival is guaranteed.⁵ Politicians are happy because they have control over the whole thing.

The second reason is environmental. Generating electrical power tends to have an impact, ecologically speaking. Burning coal produces acid rain and greenhouse gasses, to say nothing of blacklung in coal miners. Nuclear power may not pollute the air, but there is the pesky matter of where to put the nuclear waste⁶. And even if we buy the assertion that meltdowns are physical impossibilities given the design of U.S. reactors, given enough time anything could fail. Natural gas burns fairly cleanly, but supplies are limited. Even alternate energy sources have their problems -- no matter how we harvest our power, we will be fundamentally and irrevocably altering some aspect of the global environment. You can see how a society might want some regulatory control over that.

There is a downside, though. Any highly regulated industry will be by its very nature slow to change and adapt. Heck, it's designed to be that way -- stable and unchanging. But if something unexpectedly bad happens, the industry can't quickly react. You'll recall what a mess the energy crisis of the ‘70s was. And even if the regulators view the upcoming decades with perfect foresight, the lack of competition stifles technological innovation that might lower costs and discover new power sources.

Deregulation

In a truly deregulated environment, companies have to compete against each other, so any edge helps them out. That's a big incentive to innovate (it's no coincidence that the fiber optics and wireless explosions happened after the government broke AT&T up). For the sake of argument, let's say you own a power company. You cuts costs by 10%. If you then cut your rates by 6%, you gather up a lot of new business from customers who get a better deal from you than from your competition. At the same time you become stinking rich (and can hire a lot more people) because you're getting that extra 4% as extra profit on every kilowatt.

Deregulation also would help out the Alternative Energy industry.⁷ When prices of the usual fossil fuels rise, as they recently have, utilities dedicated to them are forced to raise their rates. Then a company selling, say, solar power could either (1) raise their rates too, thereby making a ton of extra cash to throw at R&D or capital improvements, (2) keep their rates the same and let customers flock to them, thus expanding their market share and growing their business or (3) a healthy combination of both. There would also be a lot of research money flowing from all corners into other alternative energy sources, and that research just might turn something not profitable (e.g., thermocline power⁸) into something that is. And the world would benefit from that greatly.

But there are a few flies in the ointment of this libertarian, free-market wet dream. There exists a "natural monopoly" in the power industry -- the wires. There's only one set of power lines connecting any given home or business to potential energy providers. Asking each new supplier to build their own state-wide grid would be prohibitively expensive, not to mention just plain silly. So until somebody figures out how to beam power directly to homes without the need for a huge, multi-billion dollar power grid, there needs to be some regulation to keep the market open despite the monopoly on the wires.

But that's the little fly; it's a solvable problem. The big, fat, ugly, biting horsefly is the inherent instability of pricing in a deregulated market. The recent spate of deregulating local phone service is one thing -- the main costs are technological, and aren't very likely to increase (not counting inflation, anyway). But electricity is generated by a commodity -- fuel -- the price of which can fluctuate quite drastically as available supply gets bigger or smaller. If we were dealing with a wonderful but ultimately unnecessary commodity -- tequila, say -- then it's no big deal if the price doubles. But electricity is a different matter. Power costs worm their way into every sector of the economy. That's great when costs go down, but should costs rise -- and with any natural resource they will from time to time -- then the impact is widespread and unavoidable.

I'm sure you can tell from the above that I personally favor a deregulated power market. I think that competition and innovation will trend electricity prices downward despite the occasional jumps. I also think that deregulation will get us off fossil fuels a lot faster than any political solution (Al Gore might make talk about banning the internal combustion engine, but the best first steps have been taken by Honda and Toyota, not Congress).

But regardless of what I think, I know that there will always be people living paycheck-to-paycheck, or living without much of a paycheck at all, who cannot afford to have their electric bill jump unexpectedly. Charging headlong into deregulation without taking this into account would be pretty contemptible. Especially in California, where environmental regulations⁹ have taken coal and nuclear power off the table, leaving consumers much more exposed to the price swings of any one resource.

And no matter what my solution to this dilemma is, I don't live in California. If Californians would prefer to regulate their electricity, so be it. And if my wife would prefer sleeping in to having a leisurely morning, so be it.

But let's not be idiots about this. No matter what regulations you want or don't want, you can't force someone to sell something for less than it costs without eventually bankrupting them. You can't both sleep in and get to work on time without having a stressful, chaotic morning.

To Californians I say: You morons! What did you think would happen?

To Ms. Wombat, on the other hand, I must say: of course, dear, I'll take out the dog this morning. Now, which black bag were you looking for?

1. Which makes about as much sense as saying that a heroin junkies obviously ruin their health, destroy their sanity, live in a cardboard boxes by the highway and turn tricks for drug money just so they can get free physicals at the methadone clinic, so we should not only turn them out of hospitals, but we should get them hooked on crack too.

2. Some friends of mine used to kid around that since "signage" means "a bunch of signs" and "baggage" means "a bunch of bags" that there must be other "-age" plurals. "Cabbage" could mean "some taxis." "Cowage" might mean "a bunch of cows." For some reason we looked up "cowage" and were led on an absurd cross-referencing adventure. "Cowage," apparently, means "a hairy leguminous vine, or those hairs when used as a vermifuge." What's a vermifuge? Glad you asked. It's "an anthelmentic," of course. We had to find a whole other dictionary to tell us what an anthelmentic was.

What does this have to do with California's energy problems? Not a damn thing. I'll shut up now.

3. You're about to say "what about Alternative Energy sources?" To which I could say "you mean like .... Hydroelectric? It didn't rain." Or I could say "like what? Wind power? Crystals? The Power of Greyskull? Find something that works, then get back to me." But instead I shall say, "hold onto that thought. I'll be with you in a just a few paragraphs."

4. No, really, it was.

5. Sometimes regulations exist to weaken or even kill an industry, à la cigarette taxes or laws about burning coal in California. But no one wants to kill electrical generation in California as a whole. Well .... almost no one.

By the way, while surfing for a good anarchy site for the above hyperlink, I stumbled across a manifesto containing the following: "As anarchists we organise in all areas of life ..."

Ahh, anarchists. Always good for a laugh.

6. There are those who would like to get rid of the waste by making nuclear weapons out of it. Needless to say, that is at best only trading one problem for another.

7. I told you I'd get around to this.

8. The thermocline is a sudden shift in the temperature of the ocean across a short depth. You've heard about it if you've read oceanography journals or Tom Clancy novels. That temperature differential is a potential energy source, just like the voltage differential across battery terminals. The problem is that so far the energy it takes to pump the water through a heat-exchange is more than the amount of energy harnessed by the exchange. But when somebody makes the process more efficient, then thar be gold in them thar oceans.

9. There are those in libertarian circles who are proposing free market solutions to environmental concerns. Some of them make sense, some of them are pretty far-fetched. If you want to get into them, you could click here, here, here or here. But since that debate isn't completely germane to this one, so I don't want to get into it now. [Ed. note -- and I suppose that dictionary rant was germane?]