Ralph Cavanagh, take a bow

Published October 1, 2000

The only I time I met Ralph Cavanagh was early in 1992, when I debated him in San Diego, California at a very large utility conference on renewable energy technologies. He and I were on a panel, along with Denis Hayes of Earth Day fame. I was there both to promote and defend coal-fired electricity.

Cavanagh and Hayes, needless to say, had different points of view. In his remarks, Cavanagh proposed that coal-fired power plants carry warning labels similar to those on cigarette packs, to the effect that coal-fired electricity is dangerous to your health. The treatment I received from the audience was commensurate with Cavanagh’s defamation of life-giving electricity. I was branded the equivalent of a cigarette salesman.

Cavanagh and Hayes were the more vocal proponents of conventional wisdom in the 1990s: that electricity conservation and renewables would lead us to a prosperous future. The conventional wisdom remains in place, but it is crumbling quickly as electricity-demand realities overwhelm the anti-electricity message we have been force-fed for the past 15 years or so.

For 10 years, we at Western Fuels Association (now through Greening Earth Society) have been promoting coal-fired electricity through a series of studies, by making speeches, and by pointing out the clear and undeniable proposition that increased electricity usage is a positive good and is not bad (as Cavanagh continues to tell us).

We took this message to many places and many states and enjoyed some success. But one place where we had no success was the State of California.

California’s electricity supply was in the news in late July and August because wishful thinking on electricity policy has come to a sudden and dramatic halt. California has inadequate electricity supply to meet the needs of a growing economy that, standing alone, is one of the marvels of the world. Cavanagh’s fingerprints are all over this turn of events, but that is not something you will read or hear about in the news.

It appears the media finally understands that technology requires electricity, and that the dramatic growth of the wired world and all it entails will require more electricity. California, of course, is home to many of the companies leading us toward the new, wired world. California’s electricity shortages have jarred technology company executives who require ever-increasing revenue growth to sustain stock valuations that are substantially above the majority of common stocks.

Politicians are falling all over themselves in assigning blame and seeking to escape the consequences of their actions in the State of California. Make no mistake about it: Government has induced the electricity crisis in California. The crisis is a consequence of misguided policies pursued by state agencies and politicians who bought into Cavanagh’s Siren song of wealth through conservation because of the media treatment accorded those who sang that song.

While California’s regulators put in place the policy construct that led to this recent crisis, the state’s economy lived off surplus from coal-fired electricity generation in the Rocky Mountain West. Many of the power plants that serve California are owned by utilities I answer to as their fuel supplier.

Here is news for you, Mr. Cavanagh and others responsible for the catastrophe in California: The surplus from the coal-fired power plants is gone. Economic growth in the Rocky Mountain West generated by technology industries is using up available capacity.

Here’s another news bulletin: Economic growth in the Rocky Mountain West will continue, we will burn more coal, and we will build more power plants. In fact, the lack of electricity supply in California will cause the companies that drive the growth of the California economy to locate incremental facilities in places where there is plenty of electricity–places like Cheyenne, Wyoming; Bismarck, North Dakota; and Omaha, Nebraska.

Just what was Cavanagh’s role in California? He is codirector of the Natural Resource Defense Council’s energy program. For years, he worked assiduously and successfully in that capacity to convince utility executives and regulators in the State of California (and in the Pacific Northwest) to abandon the supply side and pursue energy efficiency and renewable energy resources.

It was in this context that no new power plants were built in California, and it was in this context that the State of California adopted policies designed to discourage the utilization of coal-fired electricity and prohibit installation of coal-fired power plants in the state.

Ralph Cavanagh’s mission succeeded. He has been so successful that he received the 1996 Heinz Award in Public Policy for his “highly effective work in persuading legislators and regulators to permit utilities to earn money by saving energy.” We have always called this The Caviar Theory of Electricity: You make electricity so expensive only rich people can afford it, assuring that it doesn’t get used.

Ralph Cavanagh always wanted to make electricity scarce and expensive. Ralph, you got your wish. You did it in California. Come downstage center, Ralph, and take a bow. But make your exit quickly, so that the rest of the nation can go about the crucial business of providing electricity supply as the U.S. leads the way toward a wired world.

Fredrick Palmer, in addition to being president of Greening Earth Society, is general manager and chief executive officer of Western Fuels Association Inc., a not-for-profit fuel supply cooperative comprised of consumer-owned electric utilities.