Balancing Authority of Northern California -- A "Too Big To Fail" BANC

"Just ask yourself; if you were to walk into any corporation, would you find faces brimming over with deep fulfillment and authentic delight -- or stonily asking themselves 'if it weren't for this accursed paycheck, would I really imprison myself in this dungeon of the human soul?'"

This comes from a recent blog entry on the Harvard Business Review website. Just think to yourself - how many 2011 Harvard graduates are truly concerned about the social ramifications of their actions as future cogs/spokes in the corporate machinery...particularly when faced against $171,455 in student debt? Come on, they'll be the first to become corporate slaves and soon-to-be managers -- 1) to pay off their massive educational debts, and 2) to seek to transfer the wealth of the poor to themselves, to transfer the wealth of the elderly to themselves, to transfer the wealth of the powerless to themselves (the most privileged group among us), and to transfer the wealth of communities, people, and society to their corporation which is nothing more than a "human equivalent" in the eyes of the law, laws they manipulate via campaign contributions, funds provided to political action committees and corporate sponsorships, all to eliminate taxes and to favorably alter regulations that benefit their own existence.

Why would anyone post such a blasphemous statement on that hallowed website? Certainly whoever did so wasn't a Harvard Business School undergraduate or graduate.

To counter such corporate whoring, I take efforts to use cash where I can, to eliminate the 3% haircut that my local businesses like Corti Bros. take to simply sell their wares via MasterCard. I take efforts to patronize local establishments, to prevent my dollars from flowing to corporate headquarters in St. Paul, MN to enrich attorneys and tax lawyers and their management analysts who are tasked with maximizing corporate (and their own) profits, who don't give a damn about their outlets' contributions to "community" here in Sacramento or elsewhere. I try to spend local as my dollars stay close and have the side-benefit of being returned to me in myriad but often subtle ways, such as better buildings, better services, or simply as a nicer place to live, better interaction with others, along with potentially nicer architecture...instead of miles of tilt-up concrete walls encasing consumptive warehouses filled with cheaply manufactured Chinese shit.

I am exceedingly privileged to work in an electrical engineering department (my department, not my organization) that values my contributions and expertise in a specialized field, a field that cannot be manipulated to extract more from electric ratepayers, and one that I find so enjoyable that it is no longer considered work. Contrast this to people like Severin Borenstein of the Hass Business School in Berkeley. He more than likely also immensely enjoys his work, too; however, he goes to work everyday devising market mechanisms to skim profits from electric ratepayers under the guise of free-entry markets, or hedgability of retail electric pricing, and applications of financial arbitrage between day ahead and hour ahead markets...all the while working to enrich top tier management at the California ISO whose jobs are to siphon California ratepayers to support their $870,000/year salaries. Remember, the ostensible purpose of such entities as CAISO is to encourage competition, to promote "equal access," to decrease the wholesale cost of electric power so decreased costs will "trickle down" to retail customers. Tell me. Do you really think that the California ISO has worked to decrease electric rates for Californians, what with their 620+ staff and duplicative transmission planning, operations engineering, settlements and energy management systems? If these functions which were traditionally at the utility level were eliminated and consolidated at the ISO then yes, we'd certainly find efficiency gains through such actions. But PG&E, SDG&E and SCE have all had to increase these departments and had to develop new departments just to interface with the ISO...along with entities such as SMUD that isn't even a mandatory participant but who also has to maintain considerable staff (and expense) just to interface with CAISO at the periphery. The California ISO has only enabled the role that traditional energy providers have had in providing their services. The ISO is comprised of staff derived from member utilities who are now paid 28% more than what they were formerly earning doing the same jobs at their former utilities. The ISO has transmission planners; so do the member utilities, and indeed, both organizations now have more planners than before the ISO ever existed, while the number of new "planned" facilities has only decreased. Edit 9/11: And ask yourself: has "reliability' been improved over the last fifteen years of the ISO existence when, today, a single contingency (the loss of a single 500kV line in Southern California), led to the largest blackout in the history of this state? I wonder what most ratepayers would think.

I see the same thing occurring with the smart grid. You, the electric ratepayer, are lulled into thinking that the grid is archaic and "rusting away," and you're bombarded with adverts by utilities, including SMUD, arguing the benefits of this smart grid. It has nothing to do with you, the electric ratepayer. It has everything to do with enabling SMUD and every other utility to increase their role in providing the services that they already provide. Take note how neither the California ISO nor SMUD explicitly states the economic benefits of their actions upon ratepayers. SMUDs latest annual report does not even remotely suggest that the "smart grid" will reduce rates; indeed, it's not supposed to. It's supposed to enable SMUD to become more relevant in providing their service. It's not as if we (the collective we) have to endure extended power outages. It's not as if we (the collective we) couldn't already respond to tiered energy pricing. Smart meters and the coming smart grid are intended to create dozens and dozens of positions within SMUD to manage the wireless networks to aggregate customer data, to manage the 18 additional terabytes of customer usage data, to hire and retain senior smart grid managers, to create an entirely new IT staff simply to stop hackers from fucking with the networks, to employ another group of people as contractors to maintain the AMI networking and to build and test these meters (although we can be assured the actual manufacturing will eventually migrate to Eritrea), to hire people to develop automated routines to restore power on the distribution network fourteen seconds faster than we already do, on and on and on.

And so ends my rant on the vaunted "efficiency gains" that the California ISO was to bring to electricity markets and the vaunted "efficiency gains" that the smart grid is supposed to bring to the physical electricity network. I will stop here, and allow you to accept smart metering into your life, allow you to remain enraptured by technology like you are with your new hot-shit 4-G cellularized telephone, allow you to accept the flawed notion that you are better off for them, all while passively accepting 2.9% annual rate increases ad infinitum on top of all other rate increases just for the right to access these "smart" privileges. While I might argue that the upper management of Silver Spring Networks will personally gain far, far more from the smart grid than will all of SMUDs ratepayers combined, I will end my rant and accept that this shit is coming and there's not much I can do about it. Sure, system reliability may increase through "smart grid solutions" that restore the system incrementally faster, but tell me if you are willing to pay 34% more for power that's already available 99.97% of the time for an additional 0.01% reliability improvement. Actually, it doesn't matter what you are willing to pay, you're going to pay it regardless, because corporations such as Silver Springs are far more influential in the debate than ratepayers and will either pay/bribe/influence board members/senior staff/politicians to sway development of the smarte grid that favor their positions.

I personally see smart grids as incrementally drawing your ratepaying wealth directly to me, an electrical engineer for an industry bent on becoming smarter. In that sense I suppose I ought to wholeheartedly whore for such "improvements" to our "outdated," "rusting," "nineteenth century" electric infrastructure. The more electric utilities are empowered to provide that electrical service, the more relevant my job becomes.

It's not just smart grid, either. I see the creation of the Balancing Authority of Northern California (BANC) as a way for SMUD to develop itself as a mini-California ISO, as a way to spend millions of dollars to save hundreds of thousands. A mini-ISO. Call it CAISO-West. Uh-huh. A mini-ISO formed by a distribution company that happens to own transmission. Sure, the benefits appear benign on the linked slide presentation, but take my commentary as well...and with a grain of salt please:

• Strengthens local control and independence from the California ISO. Hmmm...if the CAISO was such a good fucking establishment as we've all been made to believe these last fifteen years, why, exactly, should SMUD seek to further distance itself from it? Shouldn't we seek to work even closer to this 620+ staffed behemoth rather than attempt to distance ourselves from it, particularly as we have no option but to interface with it every hour of every day? I do find it particularly revealing that if and when BANC develops itself as an independent entity, ~85% of its staff will come directly or indirectly from the CASIO. Uh-huh. A great way to strengthen its independence from it.
• Reduces members' exposure to risks of NERC non-compliance. Hmmm...seems to me that SMUDs last two NERC audits were sterling, yet they have since hired several quarter-million dollar staff members, analysts and managers, oh, for various needs. That is -- SMUD will spend millions millions! over then next several years to manage the political risk of a few hundred thousand dollars in potential NERC fines that have yet to be levied and that will likely never be levied if staff members continue to do their fucking jobs and simply follow the NERC reliability standards. Political theatre, but hey, perception is indeed everything, and particularly perception that shines negatively on management, because you can be assured that the mitigation costs to prevent such direct public exposure to phantom fines will be without limit.
• Gives MID, Redding and Roseville an ownership voice. Hmmm...seems to me that these smaller entities stand to lose in their association with BANC..assuming these phantom NERC violations ever come to light.

Just opinions, nothing more. I am obviously not a fan of the California ISO, smart grids, and the Balancing Authority of Northern California. In my small opinion, and make no mistake it is indeed small, they all seek to enrich a handful of individuals at the expense of ratepayers, to promote utilities' influence in providing electric service, and to empower utilities and their staff. But they are all led by influential individuals with individual mandates, and while on the surface these concepts may appear beneficial, I see them all as a simulacrum of noble purpose -- their real purpose is to support their own structures, their own efforts, to build their own empires. I would remind you that electric power provided by SMUD is a public good, that the introduction of these sorts of concepts into the delivery of that power ("unfettered markets," "long-run efficiencies of real-time electricity pricing," etc.) will be a net gain to a few and a net loss to the majority.

You don't have to take my word, the word of some semi-anonymous blogger; no, just review the history of deregulated electric markets in California (meltdowns) and review your own electric bill and review the fiscal carnage brought about by overlaying Borensein's electric market fundamentals upon housal unit market fundamentals. Time will prove me right -- these concepts will invariably produce a few winners and a whole lot of losers.

I saw the following occur at the California ISO:
and I see the very same thing occurring at SMUD. Based on my arguments above, you can easily gauge where I think we are on this timeline -- somewhere between maturity and bloat. Anyone not wearing blinkers can see the end game coming a thousand miles down the road...

If you think that the highbrow ideas of smarte grids, etc. have SMUDs ratepayers' best interests in mind, you are on the wrong fucking planet my friend. In the same vein, if you think corporations have the best interests of American consumers in mind, if you think that the immense profits skimmed from local communities aren't conferred to the elite enclaves of those who own the vast majority of this nation's financial assets but are instead conferred back to private investors or the public at large, you aren't going to find your way back to this third rock anytime soon.