A Critical Distinction

Indeed. Nevermind the supposition that if some choose to do x then it is okay to force everyone to do x. What a repugnant little idea.

The argument is no doubt intended to say, "there is no need to worry, nothing will change that much, since many are already following the law now". In which case, why bother at all? I suppose that the point is to prevent anyone changing their mind.

i wonder if this will apply to people who are net producers of energy, i.e. those that have voluntarily chosen to install solar power and are putting energy back on to the grid.

I volunteer for the program....unfortunately I'm not in California.

As I said in a previous post, if you read the PDF, this isn't nearly as sinister as it sounds, but it's still a symptom of horrendous energy over-regulation with the power companies worse than complicit. Southern California Edison has actually tried seeding these units on a voluntary basis with significant rebates to participants and the uptake has apparently been pretty dismal, because they're helping to write the requirement. And it wouldn't be "the state" who shuts off the AC; it would be the local energy company. "The state" just writes an enabling regulation that makes it possible and uniform for local energy companies to do this stuff.

I'm sure I'm not the first to recognize the incredible opportunity this presents to designers of tinfoil hats for thermostats! Also known as Faraday cages...

Get a load of the picture that the Poobah is standing in front of. He probably thinks of himself as a hero! Now of only the peons would just heed his wisdom, the world would be such a better place. Maybe the whip will convince them...

Don Boudreaux wrote: "Call me ... dumb-as-dirt, but I see a huge difference between voluntarily doing something and being forced to do that same something."

Most people do not see much of a difference. Surely you understand the thought process behind that lack of distinction? It's the "any right minded and good person would readily volunteer for this and only evil neanderthals who deserve to be punished anyway have a problem with it so this legislation is not only good but just."

I live in California and I'm pretty unhappy with it though. I guess that makes me one of the evil neanderthals.

You're pedestrian, bourgeois, simple-minded and dumb-as-dirt, but I agree, so you're forgiven. Why not pay people to choose this arrangement? By agreeing to have these devices installed on their thermostats, people get a rate cut or something. People with a greater need to regulate their temperature could then avoid the unexpected changes. People with the devices could also override the automatic behavior for a price.

Here's the problem with your position. If excessive demand would cause a power outage anyway, and if this arrangement prevents the outage, it isn't really a more coercive measure. Since everyone on the grid experiences the outage, the automatically lowered thermostats are not worse, because the alternative is turning everyone's climate control off altogether. Life is not a zero sum game in the long run, but it can be in the short run, and in the long run, we're all cold.

If the energy companies weren't operating under rate restrictions there would be no problem. Rates would be high enough to justify providing the necessary capacity to avoid an overload situation. So what we have here is a use of force, justifying another use of force, which will justify yet another use of force as soon as someone figures out how to bypass the system.

I don't advocate price controls, but I wouldn't say "no problems". There would be different problems.

Martin B. says "Here's the problem with your position. If excessive demand would cause a power outage anyway..."

Apparently it is you who has a problem of understanding the situation. Currently, there is no such thing as a real "excessive demand" with electricity. In 2008, demand only exceeds capacity because of restrictive government regulation - not because a market isn't available.

The government creates the problem, then they create the solution which happens to be much worse than if they hadn't created the problem to begin with.

Despite dire warnings, there is no shortage in the ability for Californians to generate electricity. There is no shortage in fuel; neither is there a shortage of materials to build generators, transmission lines, or substations.

In California, it is very difficult to get new generation on-line. There are many reasons. The biggest reason is environmental. We started by trying to reduce hazardous pollutants, but it has been extended to capping CO2. It is much more expensive to run ultra-clean generation, and margins get smaller. Next, high real estate costs and a over-taxed and over-regulated manner of doing business in California scares away a lot of investment. Lastly, building "green" generation is still mostly a losing proposition, and hardly anyone wants to commit the capital.

In addition, all new power contracts that are bought from outside the state must also meet the same stringent environmental standards. So building intra-state transmission lines isn't the answer either.

It's so easy to be forced into a repressive system by the very people who created the condition. It might be time to turn the power off at the Sacramento State House.

Martin, you wrote "Why not pay people to choose this arrangement?" OK, but that is entirely different than requiring on each new furnace/AC unit a PCT which must give the local utility the ability adjust your thermostat without your consent.

Also, under you're scenario in which the entire grid goes down, we wouldn't all be cold, we'd all be hot. It's AC use that pushes demand toward capacity.

Finally, the proponents of this feature present a false choice: either the grid goes down entirely, or the local utility overrides thermostats (which is also your argument whether you favor this feature of the PCTs or not). Oh, but we'll hardly ever have to do it they say. In fact, there are many, many other ways around the problem, and these ways don't even have to include building new generation plants. But the CEC didn't look at many alternatives before it defaulted, as government usually does, to a (proposed) command and control feature. If, as the CEC claims, the chances of needing the override feature would be extremely low, then this alone answers the question of whether it is necessary.

I'm guessing that the First Amendment puts newspaper presses beyond the reach of gov't. control. Thermostats don't get the same protection. However, I would suppose (I'm no lawyer) that a home or building owner would have to contractually agree to have this type of thermostat and give up his right to disable it.

Brad,

I've read the PDF and then I spoke with two people at the CEC and one at the consultant group which helped draft the proposed regs. Two of the three literally used the same phrase you used, that the PCT feature is not intended "to be sinister".

You don't have to conjure sinister intent to be against these regs. The fact remains that the proposed CEC regs would enable local utilities (if the PUC goes along first), whether private or muni, to override your thermostat during defined events. Most of the harm in the world is done by people with good intentions.

Finally, when people use the phrase "the state" in the context of this topic it is probably a catchall for any arm of government.

What we need is a good example of what things would be like if everyone believed in the stuff Californians dreams up. So, how about everyone who disagrees with California c__p just move out. That way we would be able to sit back and enjoy the disaster without having to feel sorry for the remaining residents.

Here in AZ, we’re making a similar move to bizarrely “fight” federal EPA regulations to enforce a more stringent state emissions standard based, to my knowledge, on nothing, much like all of the overwhelming (now debunked) global warming evidence. Same people.

This is 1) a states rights issue, combined with 2) environmental bullshit issue, which is sad because we haven’t sorted out either, scientifically or procedurally. But by all means, let’s move all restrictions forward.

The motive force behind both issues here is speed-dial liberal environmental groups (Sierra Club, et al.), nothing more.

I know these people; they have no proof whatsoever, no scientific training whatsoever, and many intellectually deficient political connections (Democrats). Their goal is sustainable government funding, and lawsuit origination.

That is identical to the New York Times' goal: pseudo-socialist control of sources of production and emissions.

Where is Methinks when we need her?

Python: "Apparently it is you who has a problem of understanding the situation. Currently, there is no such thing as a real "excessive demand" with electricity. In 2008, demand only exceeds capacity because of restrictive government regulation - not because a market isn't available."

"Excessive demand" refers to the physical limitations of the power grid. Rate restrictions are a separate issue. I haven't addressed this issue at all. I don't disagree with you. Don't make disagreements out of nothing.

Jeff S.: "Martin, you wrote "Why not pay people to choose this arrangement?" OK, but that is entirely different than requiring on each new furnace/AC unit a PCT which must give the local utility the ability adjust your thermostat without your consent."

Like I said, I agree with Boudreaux here.

Jeff S.: "Also, under you're scenario in which the entire grid goes down, we wouldn't all be cold, we'd all be hot. It's AC use that pushes demand toward capacity."

Since we're playing economist here, I was playing on "in the long run, we're all dead." I first thought of using "hot", but we aren't hot when we're dead. It's artistic license.

Guys, This already is voluntary in parts of California. I suspect the local power companies weren't terribly successful with it because (a) mine sent better and better offers as the summer dragged on and (b) I don't know anyone, including people who aren't home all day and could really use the discount, who took them up on the program. I suspect this move to make it more mandatory is a combination of near zero uptake and continued pressure to not expand capacity. Same goes with those damned CFL light bulbs. They almost have to give them away to make them competitively priced with what they replace. But I maintain that this isn't driven by any sinister plan to control the population. It's driven by a very flawed political and regulatory process. I think it's an absolute miracle that the phone companies escaped it in California during the 1990s. Maybe on the 3rd or 4th attempt, the power companies might too. But that's the problem we ought to be focussed on. Getting all hot and bothered about this one just plays into the flawed process.

Martin,

Firstly, I didn't say anything about rate restrictions. Where did you get that from?

I'm trying to understand where you are coming from because frankly I don't think you understand this topic.

There are 2 general times when a utility faces a demand crunch. The first is when something "catastrophic" occurs to the electric system (e.g. a major generator or transmission line goes down). The second is a widespread lack of capacity due to high demand at the state level.

But these instances are very different. The catastrophic events normally only place local utilities in peril, whereas statewide problems are just that. California usually maxes out at over 40,000 MW in a day. The average large generator is between 500-100 MW. So you can see how losing one generator probably won't affect the entire state.

When the CEC places the emphasis of lowering consumption using AC thermostats, they are suggesting that they are trying to solve a capacity crunch that occurs during hot days. In California, AC doesn't become a major load factor until temperatures are well above average.

That being said, there are very few times that catastrophic events occur AND it is extremely hot outside. The CEC knows this.

However, there are many times when available "capacity" reaches dangerous levels because of heat. The state ISO monitors the statewide capacity.

My conclusion is that the CEC-proposed thermostat control is designed to prevent hot times, not catastrophic times, from overloading the system through AC usage.

Utility companies already have load curtailment programs in place. Some of their plans involve placing "peaker" generators on-line, calling out the businesses on the volunteer load curtailment program, and if that is not enough, performing rolling blackouts (rotating outages).

Because it appears that the CEC is targeting statewide demand problems, I responded to you with an understanding that "excessive demand" meant at the state level. The government is the ONLY reason that capacity isn't high enough during the summer months.

To conclude, they are trying to implement a Big Brother program to mask their hyper-regulation that causes the problem.

Okay, I’ll play an economist. Actually, I’m not an economist, but I play one on digital TV…..

In the long run, you’re an idiot, and you mistakenly read Buffett, when you could have read Graham & Dodd.

And, your kids will pay your estate taxes, Marty.

Ha frickin ha ha ha.

Love,

I just bought Graham & Dodd’s publisher,

P.S. I’m inherently smarter than you, so I don’t hafta pay the proletarian tax……

Very well-said, Dr. Boudreaux!

Python: "Firstly, I didn't say anything about rate restrictions. Where did you get that from?"

You're right. Randy mentioned the rate restrictions. You discussed environmental regulations.

Python: "I'm trying to understand where you are coming from because frankly I don't think you understand this topic."

Think what you like. I've been clear enough. I haven't discussed most of the points you raise at all, so you know nothing of my understanding of the points.

Python: "There are 2 general times when a utility faces a demand crunch. The first is when something "catastrophic" occurs to the electric system (e.g. a major generator or transmission line goes down). The second is a widespread lack of capacity due to high demand at the state level."

Right. Like I said, I referred to the former. I wrote "power outage", not "short supply created by statutory restrictions". If we have a disagreement, I'm happy to discuss it with you, but you make a disagreement from nothing here.

Python: "That being said, there are very few times that catastrophic events occur AND it is extremely hot outside. The CEC knows this."

When everyone tries too pull a lot of power off of the grid at the same time, demanding power than the grid can't possibly supply at the instant, this demand might overload some component or trip a breaker or something. That was my point. If so, the coincidence between the outage and the heat is not simply chance. If not, my suggestion missed the mark.

Python: "My conclusion is that the CEC-proposed thermostat control is designed to prevent hot times, not catastrophic times, from overloading the system through AC usage."

Right. I reached the same conclusion, although any spike in demand has this effect, not only a spike created by a hot day.

Python: "To conclude, they are trying to implement a Big Brother program to mask their hyper-regulation that causes the problem."

Again, like I said at the outset, I agree with Boudreaux here. The cause of the short supply relative to a spike in demand is not an issue I addressed at all.

Mesa Econoguy: "In the long run, you’re an idiot, and you mistakenly read Buffett, when you could have read Graham & Dodd."

What do I read of Buffett? How could you possibly know?

Mesa Econoguy: "And, your kids will pay your estate taxes, Marty."

Probably so. I hope they'll pay them to a probate court that will burn the money rather than handing it to the Congress to spend, but I don't much expect it.

Mesa Econoguy: "Ha frickin ha ha ha."

You thought you were being funny?

Mesa Econoguy: "P.S. I’m inherently smarter than you, so I don’t hafta pay the proletarian tax……"

There are lots of proletarian taxes, but I hope you don't pay any tax on income spent to buy a publisher, because I advocate a progressive consumption tax. No comment on the assertion of smarts.

Spectacular idea with the printing presses. There's even a valid environmental motive: if there really isn't anything to print some days, then it's a waste of trees to continue to print news. Perhaps there would be a "commissioner for quantisation of news" who could calculate topic indexes based on "actual" quantity of news on each topic. Then he could remotely disable stories in those categories to reduce the overall paper thickness.

Some newspapers, incidentally, refrain from printing crap on non-news-days. So forcing the rest to do it would only promote healthy competition by encouraging this moral behaviour. One could also say that this system could be used to reduce the bias in media, but the EPA has no jurisdiction there, so that would have to go the department of education.

How is power distributed in California? I take it that there is a state sanctioned monopoly? I wonder why there are supply problems? LOL.

The California Energy Commission said Friday it will change the proposal to let customers override the control.

But a potential Trojan Horse remains - the radio control module that receives instructions from utilities will remain mandatory. It will not be removable by the customer.

Martin,

I can't tell if you are intentionally being obtuse but your following paragraph is the whole point.

You said "Right. Like I said, I referred to the former. I wrote "power outage", not "short supply created by statutory restrictions". If we have a disagreement, I'm happy to discuss it with you, but you make a disagreement from nothing here."

There are extremely few power outages that require AC Thermostat fixing. That is the point. They would not have that regulation just for normal power outages or even local catastrophic events. They are only doing it due to the lack of built out capacity. That should be clear to you by now.

We do have a disagreement because your entire proposition for disagreeing with Dr. Boudreaux stems from your lack of understanding of why we would need to have thermostats set. You simply can not say "Well, if outages were going to happen anyway..." That shows you don't understand what causes outages and why thermostat controling would be necessary.

"In an attempt to paint those who object to such government intrusion as alarmists, your reporter explains that 'The fact that similar radio-controlled technologies have been used on a voluntary basis in irrigation systems on farm fields and golf courses and in limited programs for buildings on Long Island is seldom mentioned' by opponents of such power."

Yeah, that statement hit me like a bucket of cold water. I was sure I was reading a news article up until that point. Then I realized it was an opinion piece.

This is just another attempt by politicians and government bureaucrats trying to cover up their own incompetence. They won't let utilities build more power plants so they come up with a lunatic approach like this. Too bad the laws of supply and demand don't work in California.

Bradley: "We do have a disagreement because your entire proposition for disagreeing with Dr. Boudreaux stems from your lack of understanding of why we would need to have thermostats set. You simply can not say "Well, if outages were going to happen anyway..." That shows you don't understand what causes outages and why thermostat controling would be necessary."

If you'll simply read my first post and all subsequent posts, you'll see that I don't disagree with Dr. Boudreaux. I simply can say. "Well, if outages were going to happen anyway ...". See? I just said it. Having said it, I'll say again, as I have from the outset, that I agree with Boudreaux here. I actually wrote the words "I agree" in the post. I have no idea what I can't the point across this way.

You just can't agree with some people.

From the article Boudreaux links:

“You realize there are times — very rarely, once every few years — when you would be subject to a rotating outage and everything would crash including your computer and traffic lights, and you don’t want to do that,” said Arthur H. Rosenfeld, a member of the energy commission.

Reducing individual customers’ electrical use — if necessary, involuntarily — could avoid that, Dr. Rosenfeld said. “If you can control rotating outages by letting everyone in the state share the pain,” he said, “there’s a lot less pain to go around.”

So outages certainly are the rationale for the measure. Again, I don't support the compulsory control of every thermostat by the electric utility. I agree with Boudreaux. It should be voluntary. I suggested instead that the utility pay people to install remote controls on their thermostats and that people accepting controls have the option of overriding at a price. Get the pricing right, and this measure solves the problem. It just says that supply is sometimes short compared with demand, and price rises at these times and then falls back again. It's a perfectly legitimate means of allocating capacity when demand spikes. If capacity is inadequate, because regulators don't permit enough power generation, that's a separate issue.

Martin,

I really hate to beat a dead horse but...

1) You say in your first post, 2nd paragraph: "Here is the problem with your [Dr. Boudreaux's] position..."

Yes, somewhere you say you agree but then you argue on behalf of those whom Boudreaux opposes.

2) You also said:

"Since everyone on the grid experiences the outage, the automatically lowered thermostats are not worse, because the alternative is turning everyone's climate control off altogether."

This is so false that it hurts. Few customers experience an outage during a rolling blackout. If the grid demand goes over by 5%, only 7-8% of people will see the outage. Each utility has load curtailment programs in place that kick in before system meltdown. They can drop load at the substation/circuit level - knocking out select customers (around 2500 customers per circuit) for an hour at a time until the problem passes. It is fairly precise because the big utilities have load monitors at each circuit.

3) In your last post you say "I suggested instead that the utility pay people to install remote controls on their thermostats and that people accepting controls have the option of overriding at a price."

Please read this!! Utility companies in California do not technically pay for anything. They get approved by the CPUC to pass expenses on to customers fairly across the entire customer base. Utilities are allowed to adjust their rates so that they receive a low but consistent profit. If the CPUC mandated installing new meters or thermostats, that bill would be paid for by all customers. Now, you could give certain customers discounts for allowing control of the thermostats, however the other customers would be paying for discounts.

4) Finally, you say: "It just says that supply is sometimes short compared with demand, and price rises at these times and then falls back again."

Again, in cases where thermostat control is necessary, the supply is almost always limited because of regulatory bodies in the state. You have essentially said "As long as they won't let us have enough power, I guess it would be alright if they controlled my thermostat. But the reason we don't have enough power is a separate issue."

And who is Bradley?

Python: "Yes, somewhere you say you agree but then you argue on behalf of those whom Boudreaux opposes."

That's just incredibly simplistic. It's not like there are two sides to every question. There are countless sides to every question. I agree at length with Boudreaux by detailing a voluntary implementation of what the proponents of thermostat controls advocate. Then I state their rationale for advocating them.

Python: "This is so false that it hurts. Few customers experience an outage during a rolling blackout. If the grid demand goes over by 5%, only 7-8% of people will see the outage."

Gee. Only 7-8% of people. Now, tell us which 7-8%. We don't all die at the same time, but we all die, and we may all pay life insurance premiums at the same time.

Python: "Please read this!! Utility companies in California do not technically pay for anything."

Duh. Consumers pay for electricity. The question is: who pays what and when?

Python: "Now, you could give certain customers discounts for allowing control of the thermostats, however the other customers would be paying for discounts."

Nonsense. Some customers accept the discomfort of automatically lowered thermostats when demand peaks. Others don't. The latter pay a higher price only for a margin of consumption during peaks. Some people freely accept lower consumption during peaks, thus paying less. These people may also elect the higher price during peaks by overriding the control. It's a perfectly legitimate means of allocating capacity during demand peaks.

Python: "Again, in cases where thermostat control is necessary, the supply is almost always limited because of regulatory bodies in the state."

It's a separate issue. The capacity is what it is, and you don't know that higher capacity without this type of control mechanism would actually cost less.

Python: "You have essentially said "As long as they won't let us have enough power, I guess it would be alright if they controlled my thermostat. But the reason we don't have enough power is a separate issue."

The capacity is a separate issue as a matter of fact. "They" make lots of decisions for us, and I'm in no position to change that, but you don't have the slightest evidence that a free market rules out this type of arrangement in favor of higher capacity costing more. Predicting the weather is notoriously difficult. Is it preferable to generate more power because we have a really hot day now and then? Your regulatory model has this effect. I'm willing to consider others.

And yes, I'll accept the control with the pricing structure described, because heat doesn't bother me so much. I was born and raised in the south. My folks still don't have central air in parts of their house. If you want to pay more for uninterrupted service, that's your business.

Now, if you want to say that some electric utilities should offer these controls, voluntarily as described, while others don't, I think that's just fine.

Python: "And who is Bradley?"

I don't know. Who is Bradley? I quoted Rosenfeld.

The crux of the issue is peak demand and the state's deliberate obstruction of new generating capacity. Not only has the state blocked new nukes and coal plants WITHIN the state, they recently forbid the IMPORTATION of electricity from coal, specifically, sources outside the state that do not meet California's air quality standards.

Mr. Warren Buffett has propose a new nuke station in Idaho to serve the California market; at least two other serious proposals are out there.

The state's policy is "Conservation First."

If we citizens of the state do not meet our conservation quotas, set for us by the state, the state will COMPEL us to conserve. I call that "coercive conservation."

They have created the problem and now intend to take away our freedom to contract so as to mitigate the problem they created.

Thanks a lot!

BTW, I wrote the original article in AmericanThinker.com on Jan 4th and have been in the electric business in California for 30 years.

Here's the thread.

http://cafehayek.typepad.com/hayek/2008/01/a-critical-dist.html#comments

Boudreaux says, "Call me pedestrian -- bourgeois -- simple-minded -- dumb-as-dirt, but I see a huge difference between voluntarily doing something and being forced to do that same something."

Here's my first post with emphasis added.

"You're pedestrian, bourgeois, simple-minded and dumb-as-dirt, but I agree, so you're forgiven. Why not pay people to choose this arrangement? By agreeing to have these devices installed on their thermostats, people get a rate cut or something. People with a greater need to regulate their temperature could then avoid the unexpected changes. People with the devices could also override the automatic behavior for a price."