LA receives 20-25% of its electricity in a normal day from a nuclear plant, coal-powered plant, and two hydroelectric facilities in Arizona. It partially owns the non-hydro facilities.
The electricity supplied from Arizona is low cost, base load, which makes it highly attractive.
The Los Angeles City Council voted May 12, 2010 to boycott Arizona to protest Arizona’s SB 1070. LA Mayor Antonio Villaraigosa endorsed the boycott. The Mayor explained: “While we recognize that as neighbors, we share resources and ties with the state of Arizona that may be difficult to sever, our goal is not to hurt the local economy of Los Angeles, but to impact the economy of Arizona. Our intent is to use our dollars – or the withholding of our dollars – to send a message.”
LA thereby declared economic war against Arizona to achieve a political goal – the repeal of SB 1070.
Or did it?
The actual boycott is largely symbolic, and highly selective, although it will cost the Arizona hospitality industry. The City canceled some travel plans to Arizona, but recognizes it cannot terminate legal contracts.
LAX cannot therefore legally, or economically, cut off the flights of two Arizona based airlines, U.S. Air and Mesa. It earns $38 million annually in fees from these airlines.
The red light cameras which generate fines for the city and state are operated by American Traffic Solutions of Scottsdale, Arizona. That contract is not presently in jeopardy. LA can’t afford the economic hit.
The Council does not want the LA Lakers to boycott the Phoenix Suns in the NBA playoffs, because the City is anticipating another NBA championship.
This selective boycott is not a really boycott, but a PR exercise in political hot air.
Gary Pierce, one of Arizona’s five members of the state Corporations Commission, which regulates Arizona’s utilities, wrote a letter on May 18 to Mayor Villaraigosa and the 15 LA City Council members.
He called LA’s boycott bluff, and pointed out the hypocrisy of the political leaders.
He proposed that if LA really meant to boycott Arizona, then he could facilitate Arizona’s utilities acquisition of the attractive power flowing to Los Angeles.
The local news channels, as well as cable networks, and LA politicians asserted Arizona threatened to cut off LA’s power.
A spokesperson for LA’s Mayor stated no response was warranted, and then, of course, responded: “We’re not going to respond to threats from a state which has isolated itself from the America that values freedom, liberty and basic human rights.”
Councilwoman Janice Hahn, candidate for lieutenant governor, referred to Commissioner Pierce as “the Forest Gump of Arizona politics.” Her campaign manager wrote “Never mind that he is a right-wing Republican who supports a racist law in Arizona that even the United Nations has condemned.”
Not exactly a reasoned discourse on the merits.
Apparently no one reads any more.
The United States Attorney General, the Secretary of Homeland Security, and other federal, state, and local officials, who have criticized the Arizona bill, have admitted to not having read SB 1070.
Similarly, the actual words of Commissioner’s Pierce’s letter eluded the commentators. He wrote: “If an economic boycott is truly what you desire, I will be happy to encourage Arizona utilities to renegotiate your power agreements so Los Angeles no longer receives any power from Arizona-based generation. I am confident that Arizona’s utilities would be happy to take those electrons off your hands. If, however, you find the City Council lacks the strength of its convictions to turn off the lights in Los Angeles and boycott Arizona power, please reconsider the wisdom of attempting to harm Arizona’s economy.”
No threats there.
Commissioner Pierce readily admits Arizona cannot unilaterally terminate the existing power agreements.
San Diego was joining the boycott Arizona bandwagon when it realized that Arizonans were cancelling their reservations in San Diego. They like to escape to cooler, coastal San Diego during the heat of the summer.
About 2 million Arizonans visit San Diego annually. It’s a short drive, but a large economic boost to the san diego economy.
Boycotts can go both ways.
The LA/Arizona/San Diego boycott scenario brings up the issue of economic balkanization of the United States.
America’s founding fathers, especially the drafters of the Constitution, have been proven to be political geniuses. They formed a country, which has succeeded as none in history.
America could have been different. Indeed, it was different.
The victorious 13 colonies founded a new country, the United States of America, but it failed.
The United States was founded under the Articles of Confederation, which had several shortcomings.
One of the greatest was that Congress was not given the power to regulate commerce. States retained the commerce powers. America was not yet an economic unit.
The Constitution changed that. Not only was Congress given power to regulate commerce, but no duty or tax shall be laid upon exports from any state. Nor, without the consent of Congress, can any state lay a duty on tonnage, or imposts or duties on any imports or exports.
America became an economic unit, indivisible.
And our local politicians for cheap political gains wish to engage in economic warfare, not understanding the forces they might unleash.
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