A few thoughts on conspiracy

[rubydick]

Propaganda is an interesting word. As a nation we are overwhelmed by propaganda dismissing virtually all suggestions of government misdeeds as simple "conspiracy theories." It's so easy, isn't it? Disagree? Call it a "conspiracy theory."

I remember well the comment of a friend of mine in Texas when we in San Diego County suddenly experienced astronomical increases in the price of our electricity. "You people out in California are full of conspiracy theories, aren't you? You simply need to pull your heads out of the hookah and build some more power plants."

Let's examine that statement. Electricity prices show an overnight increase of a gajillion percent and much of America can be convinced it's simply because California didn't build enough power plants over the past few decades. Right. This idea ranks right up there with the notion that we cannot allow the imporatation of US manufactured drugs from Canada because we simply cannot trust the Canucks. How do those sly devils do it? Buying US drugs and then able to sell the same back to us for less than we pay here in the US. And they still make a profit. Gotta be a conspiracy theory.

Similarly, today in America the majority party tells us that they are for small government while they have presided over the greatest increase in government in the history of the planet.

They tell us they are fighting terrorists "over there so we don't have to fight them over here" even though we will soon have lost more "over there" than were lost "over here."

These are the people that shout the words "freedom" while simultaneously ejecting a woman from the audience for the crime of wearing a t-shirt with an objectionable slogan.

All this is a rather long-winded intro to an item a friend sent me a few days ago. Hope you find it interesting.

Thinking About Conspiracy Theories: 9/11 & JFK

Here's the intro:

"We need to come to grips with conspiracies. Conspiracies are as American as apple pie. All they require is that two or more persons collaborate in actions to bring about illegal ends. When two guys knock off a 7/11 store, they are engaged in a conspiracy. Most conspiracies in our country are economic, such as Enron, WorldCom, and now Halliburton as it exploits the opportunities for amassing profits in Iraq. Insider trading is a simple example, since investors and brokers collaborate to benefit from privileged information. Ordinarily, however, the media does not describe them as "conspiracies". The two most important conspiracies in our history are surely those involving JFK and 9/11."

No problem. I'm sure it's just a "conspiracy theory."

 

[perry]

Richard:

I have not read your link yet because I only have a few minutes this morning.

However, I agree with the general premis of your thread in that Americans - and other people in the world (America gets blammed for an awfull lot) love to focus on "conspriacy" theories, and ignore real world affecting conspiaracies by people working to extract the maximum amount of money from an unusual situation like the california power situation. Yes there was in fact a real problem (but not as simple as building a few more power plants) - but the problem could have been dealt with in a different way than what happened (and companies could still have made a great profit).

I''ll find time later to read your link.

Perry

 

[rubydick]

Perry,

Thanks. I understand you work in the energy sector, and I in the gem area.

Let me try to put things in gem perspective. California was a regular sight holder and dutifully made her purchases several times per year according to the standards set up by the De Exxon monopoly of the day.

Despite these arrangements, when California attended the next sight, she found herself being asked to pay prices many times what other sight holders were being offered. The excuse given was that a confluence of demand from cutting factories abroad, coupled with maintenance problems at domestic lapidaries had pushed the distribution system entirely over the edge in that particular place. Right.

Smoke and a whole lot of mirrors.

Sad to say, but we Americans have been entertained and propagandized to such a degree that most of us today fail to realize when we are being had. We are unable to entertain the "conspiracy theory" that our pockets are being picked. So much so that, when the Terminator appears a few months later with a vow to save us from the energy monster, we vote for him, despite the obvious evidence that he is working for exactly those who orchestrated the theft in the first place.

I''m happy to say that the people of California appear to have woken from their slumber. Arnie tried the same BS charade last November and got his ass handed to him. Thankfully, Cali ain''t Ohio. We ditched the electronic cheating machines. Now Arnie''s busy discovering his "democratic" roots. Suddenly all have forgotten what a "girlie boy" he really is.

It''s time for the rest of this nation to wake up. Let''s show the world we are not simply WWII Germans, that the human condition has advanced in some meaningful way since those dark days. The Iraq debacle has certainly demonstrated one thing. Like Germany, it can happen here. It did. Now it''s time that we Americans begin apologizing to the world. There''s no shame in saying sorry. Indeed, if I am not mistaken, admission of one''s sins is the principle idea behind the teachings of Jesus Christ.

 

[strmrdr]

"Now it''s time that we Americans begin apologizing to the world."

What for? saving Europe from the Germans twice in the last 100 years.
For letting the idiots back in charge after the wars?
Defeating the Soviet Union in the cold war.
Provide the reserve currency that almost all trade between countries is conducted in?
For providing billion of dollars in aid to ungrateful countries?
For rebuilding Japan into a industrial powerhouse.
For rebuilding dozens of other countries.
For buying the cheap crap from China that is allowing them to build a military that will be larger than ours in ways other than manpower by 2020?
For opening our markets to countries that wont open theirs like they promised in return?
Those same countries then complaining about the trade deficit.
For paying the research and development costs that allows other countries to regulate meds at low cost and kills our own people for lack of medical care.

Yea we got a lot to be sorry for.....NOT
its about time to 0 out foriegn aid and tell the world to fend for itself, bring our troops home to seal the border and take care of our own.
Yep its about that time and anyone that dont like it can move to France

 

[perry]

Richard: I think you misunderstand what happened in California with the energy markets.

I also have to agree in general with Storm on his comments.

While America has made some mistakes - an awfull lot that is has done has been great for the world; and an awful lot of "problems" that the world blames on America is just people looking to blame someone else.

We are not perfect, and we have made mistakes - and America has in fact appologized for some of those mistakes.

It all comes down to an old adage: Show me someone who dosn''t make mistakes - and I''ll show you someone who dosn''t do anything.

Concerning the California energy situation:

People need to first realize that historically that Utilitities are extreemly regulated by the states. They could not do projects or raise rates without state approval. Profit is controlled by the state - they are "regulated" monopolies.

It was pointed out that there was in fact a lot of "fat" and conservative decission makeing going on in the utility segment in many cases because of government regulation - and the proposal was that long term the states and US would be better if the Utility sector was largly allowed to compete in a free market - with a lot less state control (and in fact there is evidence that this would in fact work better than the historical system).

However, that was too big a step to take at once: The State of California proposed that they do a several step process. First they would allow companies to build "mercahant" power plants - but they would still regulate the price at which energy was sold to the local power companies. The state wanted those power rates to be low.

Some people have argued that the power companies agreed with this - that it was all their fault for agreeing to it. But when the regualtor tells you that is what they want you to do - and they control your profit (and loss) - do you honestly think the power companies would have said no. In actuallity, they did present information that pointed out the hole in the plan (what if the cost of producing or acquiring the power was higher than the state approved sale price); but the state would have nothing to agreeing to the concept of flexible pricing.

Why would anyone build a power plant (or a factory) if you were not allowed to charge prices based on market rates - and the "state" approved rates were lower than what you could get by building a power plant elsewhere...

Power plants are like cars - they age, breakdown, and eventually have to be replaced.

Add to this that the energy use in california (and other states) has been steadily climbing.

It took a few years - but it finally reached a point where power demand was more than an old power infrastructure could support. Added to that was the fact that fuel prices for those power plants started going up. The cost of power now became more than the state approved sale price for it.

This did not sneak up on the state. Request were made to renegotiate the cost of power part of the agreement. No deal - said the state. This is the agreement and you will stick with it - and we don''t care if you loose money.

There was an interesting clause to those state power price agreements. If there was "insufficent" production for the day - power could be sold on a market price basis. The only way the owners of power plants could make enough money to pay for the operation of the plant was to "manipulate" their avialability such that they could sell power at market prices.

In actuallity: California demonstrated the problems of partial deregulation. All that would have had to be done was for the state to recognize that the power plant owners needed to make a reasonable profit and to recover the cost of increasing fuel prices. There still might have been some minor difficutlties - but nothing like what happened.

One of the most educational things about the power utilities that I ever learned was revealed to me in the early 1980''s.

I saw a list of all the major power companies in the US and their credit rating. There were 4 utilities in the US with AAA ratings (and the rest were fairly evenly split betwen A and AA). Now a AAA rating means that the utility is in great financial shape and can borrow money for less - indicating a lower cost per unit product - and a lower customer rate.

3 of those 4 utilities were in Wisconsin - my home state. The 4th one was in Florida. Wisconsin also had some of the lowest power rates arround.

What did Wisconsin do that was different from the other states - I asked.

My investigation revealed that it was all how the State Public Service Commission (PSC) regulated the utilities. Reasonable recovery of project cost, automatic fuel cost adjustment, etc.

There was even a recent example. Wisconsin like many other states had built 3 nuclear power plants - they had a 4th one under early construction. Only the projections for the need for more generation changed to less need - and the projection for the cost of that nuclear plant increased - and it did not look like such a good deal.

Wisconsin is the only state where the PSC essentially got together with the Utilities building that nuclear plant and said: When you proposed building that plant it was reasonable based on the projections at the time, and the cost of the plant was reasonabl based on the projections at that time. We (the PSC) are not sure that is now true. Tell you what, if you agree that the plant is not needed at its cost estimate - and want to stop at this point - we''ll allow you to recover all of your intitial investiment and cancelation charges. It took the Utility partners exactly 1 day for them to accept the offer. Most peopel in Wisconsin do not even know that construction had once started on a 4th nuclear power plant.

Every other state told their utilities that you cannot recover a single dollar that you have invested in those plants unless it produces power. Many companies were pushed into near bankruptcy - or even bankruptcy because of that. In the end the utility customers have to pay that cost - because it now cost more to operate a utility in that state (and some of those nuclear plants went from 300 million dollar estimated construction to 1.5 billion actual constrution cost). Those plant were still being designed as they were built - and then they wer liscensed after they were buit. Three Mile Island, and Browns Ferry identified that better designs would prevent problems - and changing major desing ideas half way through construction gets real costly real fast - and added many years (even a decade or more) to completion.

Every state the tells you the customer that they are saving you money by restricting the profit of its power companines to the point of affecting their credit rating - is lying to you (here is a classic example of the problem). It''s been a while - but I''d be real interested to again see a list of the credit ratings of the power companies.

The nuclear industry will never build a plant again under the licensing and financing arrangemets of the past. All future nuclear plants (and they will be built) will have a certified plant design and full construction permit in hand before construction is started. Many of them will also have the Operating permit in had before construction is started (current status is that 2 companies have applied for early site permits that would allow construction to start before an Operating liscense is issued, and 3 or 4 companies are persuing a Combined Cunstruction and Operating permit at once). Only relatively minor building details, and site specific items will have to be finished after approval (a plant in Florida is different in the details than a plant in Wisconsin due to the weather and state building codes).

There are 3 or 4 preapproved plant designs available now. But, the Westinghouse AP1000 is the one that will be built of the current approved designs (PWR design). The previous approved designs are not as good. GE is about 1/2 of the way through on their next generation design approva (BWR design) - and it should be approved in several years if their are no design issues.

The breeder reactors you here about on the news that can burn up waste fuel are at least a decade away - and more likey 20 years.

Perry

 

[rubydick]

Perry,

Don't know if you caught this one, but here it is:

Enron traders caught on tape

Here's a brief selection:

"The tapes, from Enron's West Coast trading desk, also confirm what CBS reported years ago: that in secret deals with power producers, traders deliberately drove up prices by ordering power plants shut down."

Interesting, I think you'll agree. Note that both Enron and the Justice Department tried to keep this tape from being made public. Which pretty much proves my point.

 

[valeria101]

Well, Strm... that''s great, but it can''t be all good, can it? Not admitting nay mistake may not be the greatest way to go. But ... I ditched politics a few years ago. Still vote with the right, only don''t work at it anymore.

Last year I had a chance to help with a new book about how international aid worked in this part of the world. Ours was not the first such document, although the evaluation of humanitarian and economic aid effects is alarmingly new (fresher than my starting grad studies in development economics!). Once some evaluation did start - and it was a World Bank initiative, if I remember well, you got a whole new vocabulary that no one would have suspected is needed: with words like ''Aid Mogul'' ! I didn''t make that up... but had the honor to learn from and work for some of them, both in your country and mine.

Gotta admit that between the US razing one or two Romanian cities during WWII and the same US backing the fall of the Reds, Romanians remember the last and have totally forgotten the former. This is nothing though: the Japanese must be holding the record. Or the Germans... Apparently, history comes with steep discount factor. Hopefully, something comparably big and good could still be done in Afganistan and Irak so that the locals get a chance to forget the ugly at some point. Like the Japanese did, ultimately.

The part with the dollar sounds a bit iffy - ''dollarization'' doesn''t evoke fond memories at all. Replacing national currencies on the black or white markets doesn''t seem to do much good to the world. I doubt it even does any good to the dollar holders, but that is another story that I simply know nothing about.

The thought that this is indeed the best ''system'' in the books is quite disturbing. But ... I think I do agree with you on that part, despite all of the above.

 

[valeria101]

Date: 2/9/2006 10:49:41 PM
Author:Richard Hughes



Let''s examine that statement. Electricity prices show an overnight increase of a gajillion percent and much of America can be convinced it''s simply because California didn''t build enough power plants over the past few decades.

Engineering an imperfect market? Well... not new, but every example is music to my ears.

Diamond grading standards agreeing to disagree on the other pages of this forum make a comparably petty other, IMO.

I so love conspiracy theory! Althoughthis thread takes away a bit of the fun, just when it looked like a fair classification system got up and running. Nothing official, but it could have been lest this confounding evidence here. By mid next week, a visiting delegation of US business school professors left here - and over the last couple of beers we''ve got to have this interesting session of philosophical international comparisons so to speak, concluded with the formulation of an important rule of thumb: that "functional democracy is where conspiracy theorists are overstating reality, and dysfunctional democracy/dictatorship is that where conspiracy theorists understate the facts" . Oh well, who said science is easy.

 

[perry]

Richard:

I presume that is the tape I heard a year or so ago - I am familiar with it.

All Enron did was discover what several plants were already did and expand on it.

There is somewhat of a myth about ordering plant shut down as well.

Most power plants takes a day or more to start - and the largest ones takes 3-4 days to start up and get to full power. However, once started they can ramp up and down within a certain power range reasonably quickly. Only combustion turbine plants may be able to shut down each night and restart during the day (even then in may not be a great idea to do so - lots of wear and tear during shutdown and restart).

So what really happens is that someone with a 400 MW power plant ramps it down to 150 MW at night. Early in the morning of each day - when things worked normally - they would report that the plant was availabe for full generation for the day; and "dispatch" would tell them to ramp up and down during the day as necessary to support the grid. All power produced under the normal system would be sold at the state mandated price.

However, power plants are complicated and it is not that uncommon for their to be equipment problems that reduces the available capacity of the plant. Thus, it would not be that uncommon for the plant to report in the morning that only 200 MW of power would be avaiable untill they performed certain repairs (some a few hours - others could be weeks). All power sold up to 200 MW would be sold at the state mandated price.

Remember, that due to fuel price increases, and possibly major maintenance cost some of the plants were operating at a loss at the state mandated price.

So if the plant reported that they had "problems" in the morning and could only produce say 200 MW at the time - the first 200 MW of generation would be sold at the state mandated price. If the plant "fixed" the problem and could ramp up higher than 200 MW - then any power produced over 200 MW could be sold at "market" prices for the day.

A few plants started doing this with some regularity just to ensure their profitability - and then Enron and others figured it out and started controling much of their network of plants to get arround the state mandated sale price - and be able to sell a lot of power at "market" prices for the day - which can go very high.

The key problem though was not the enron behaviour - but the fact that the State would not allow generating plants to recover reasonable cost of generating power and make a reasonable profit. Chances are good that people never would have even figured out how to manipulate the power market if that had happened.

There was still a shortage of generation caused in part by the shutdown of older smaller (and most costly) plants, in part by electrical use growth - and the fact that there was essentially no incentive for anyone to build more power plants under the state controlled system. There would have been rolling brownouts and perhaps even rolling blackouts at times - but at least the power cost would have been reasonable if the state had not locked down power cost so well.

When you look at the "root" cause - the thing that "if it had been done" would have prevented the problem - it all goes back to the state''s "partial" deregulation plan.

I do note that most states have decided to keep their utilities in a more fully regulated status after California. No one wants to move directly to full deregulation - and no one wants to try partial derugulation after the California mess.

Perry

 

[strmrdr]

another part of the power mess is that they could sell the electricity to phoenix and Vegas at a higher rate than to CA so a lot of plants that used to provide peak power to CA were used to power the increasing demand in the other areas.

Simple fact of the matter is that CA said you have to sell us the power for x dollars and the producers said bite me we will idle plants before selling it below cost.
Or should the people in AZ and NV subsidise the electricty for CA?
That was actualy happening the customers in NV were paying for the plants that were producing power for CA.

 

[rubydick]

Sturm,

You're gonna love this one:

How Kilowatt Socialism Saved L.A. from the Energy Crisis

Ana, loved your comment. And Perry, you made some good points, too. As the above article states:

"Why is Los Angeles an island of tranquillity in the electric-power crisis that has rocked California and threatens to spread across the nation?
News stories have repeatedly told us that the city's ownership and operation of its own generating stations is the principal reason. By staying clear of the state's 1996 deregulation scheme for private utilities, the Department of Water and Power was able to hold onto its power plants."

The Wikipedia has a nice description of the whole mess:

California's Energy Crisis

It concludes with:

"On May 24, 2001, future governor Arnold Schwarzenegger and former Los Angeles Mayor Richard Riordan met with Enron CEO Ken Lay, at the Peninsula Hotel in Beverly Hills, at a meeting convened for Enron to present its "Comprehensive Solution for California," which called for an end to Federal and state investigations into Enron's role in the California energy crisis.In September 2003, Schwarzenegger was elected Governor of California to replace Governor Davis."

 

[strmrdr]

I have no problem with city ran utilities.
they already do it with water and sewer around here.
Some areas near by the local phone service is also.
You contract with the long distance company of your choice for long distance.
They have some of the lowest rates in the area.