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SE2 SHOULD DEVELOP A CALIFORNIA ENERGY RECOVERY PLAN
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	It seems likely that the next Governor, whether a Democrat or a
Republican, will be better on energy than Jerry Brown; it will be hard to
be worse.

	The Brown policies, though only somewhat worse than those of many
other states, have put California into an expensive and dangerous
position with regard to electricity.  California is heavily dependent
on expensive imported oil, and also imports much of its electricity
directly from other states.  California is a "bad energy citizen" and
risks being punished for its sins if there is a crisis.

	The next Governor and the Legislature are likely to do better
if there is a plan for California's energy recovery already prepared
in January 1983, and if the new Governor is inclined to use it as the basis
for action and further planning.

	This is a proposal that SE2 prepare such a plan and organize
the political work required to get it a favorable reception.
We see the following steps:

	1. SE2 hire someone to work with the Stanford chapter to prepare
the plan.

	2. We hold informal discussions with likely candidates of
both parties even before the primaries to acquaint them with the
seriousness of the situation and the fact that a California Energy
Recovery plan is being prepared.

	3. We ask for no advance commitments.

	4. A major objective is to persuade potential candidates not to
make pre-election or pre-primary commitments that foreclose any energy
options.  We fear that attempts will be made by the no-growth advocates
to extract such commitments.

	5. In our briefings we ask the help of prominent engineers and
scientists including the heads of engineering societies, prominent
California industrialists, prominent labor leaders and academics.
We also ask the Secretary of Energy for help, and in the case
of Democrats, prominent national Democrats who have taken pro growth
positions on energy issues.

	6. The plan should include both technical and institutional
proposals for reducing the regulatory and financial obstacles to
California meeting its future energy needs.

	7. The main technical proposals will involve more nuclear and
other power plants.  The state is beginning to lose industry because of
lack of power and the prospect of very high electricity prices in the
future.  The key to this is probably the removal of regulatory
obstacles and more realistic regulation of prices to make it possible
to finance needed new capacity.  We can hope to return to a situation
in which the actual decisions about what plants to build and when
are effectively made by the utilities.

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	8. The institutional proposals should probably include abolishing
the State Energy Commission.  It presents additional bureaucratic
obstacles beyond those presented by the State Public Utilities
Commission.  To fulfill its nominal function of second guessing the
utilities, it would have to have as much internal expertise as do
the utilities.  The pricing rules that penalize increased electricity
use in a way unrelated to costs are probably producing economic
distortions that will increase with time.

	9. In order to achieve adequate electricity supplies, it may
eventually be necessary to decontrol the price of generated electricity.
While the retail distribution of electricity is a natural monopoly,
with modern transmission facilities, electricity generation is not,
and its price may be best regulated by a free market after suitable
institutional changes have been made to separate the businesses of
generating and distributing electricity.  Most likely the issues
involved will be too complicated and controversial for a concrete
proposal to be included in the plan.

	10. SE2 should be ready to advise on suitable appointments to the
Public Utilities Commission and the Energy Commission as long as it
lasts.  Of course, these shouldn't be part of the plan itself.

	11. Perhaps there should be a draft California Energy Recovery
Act to be submitted by the Governor to the Legislature.

	12. Perhaps the Governor should be asked to hold a Conference
on Energy Recovery soon after taking office or even between the election
and inauguration.  The plan would invite prominent people from industry,
academia, the engineering community, and labor to discuss the proposed
plan, amend it, and confirm the result as their advice to the
Governor and Legislature.

	It may be that the above points are too ambitious for the Stanford
SE2 chapter and the
effort will have to be scaled down.

	We need a document on the present situation explaining why
California is in trouble and including some scenarios of disaster.

	We need another document which is a draft of the plan itself.

	We need a political strategy including who is to approach each
prominent potential candidate.

	Our strategy should consider how to minimize opposition from the
environmentalists.  Perhaps compromise with them will be possible, although
at present they seem to be in no mood for any kind of compromise.

	The main problem is to pose the issues
correctly.  He who gets to state the question often determines
the answer.

[For all its nice printing, this is just a draft.  It hasn't even
been discussed by the Stanford SE2 chapter]. 1981 December 15