BAILOUT WATCH: Keeping an eye on the energy industry and the politicians
Bailout Watch #15 – Feb 28, 2001
Good news: the crisis is over.
According to Gov. Davis, California has reached "the backside of the crisis." (SF Chronicle 3/27/01). Could he be right? Now that the taxpayers are spending billions to buy electricity for the utility companies at the extortionate prices charged by the energy companies, and ratepayers are about to spend billions more to bail out the utility companies, perhaps they are done with us. What more could they want? Answer: whatever is left that they can take, we suspect.
Savings to consumers if Gov. Wilson vetoed deregulation: $10 billion. Getting to say "I signed the nation’s most sweeping energy deregulation law": Priceless. The OC Register reports that, prior to signing the deregulation law, Governor Wilson’s Department of General Services informed the Governor that California consumers would see their energy bills drop by $9 –10 billion between 1996 and 2001 if the state did not deregulate. Consumers would be subject to upwards of $37 billion in extra charges if he signed AB 1890, according to DGS.
Too little to fail. California ratepayers are going to be forced to pay California’s $30 billion utility companies’ massive, multi-billion dollar bailouts ostensibly because we cannot let the utilities go bankrupt — a scenario known as "too big to fail." But what about the people who have to struggle to pay their bills? Turns out that American industry believes they are too little to fail. Legislation in the US Senate would make it harder for consumers to file for personal bankruptcy. Supporters of the legislation say that consumers should be forced to pony up more of their own resources to pay creditors. Wonder what they would say about making the utilities’ parent companies return the billions of dollars they’ve siphoned out of their utility subsidiaries, which now claim to be broke?
Seems like a good time to be off fundraising. Apparently Governor Davis thinks that the middle of his state’s worst economic and public policy crisis in generations is as good a time as any to add to his campaign war chest. In addition to a Washington, D.C. fundraising event with the Democratic Governors Association, Gov. Davis has reportedly scheduled some personal fundraising engagements in New York. Perhaps he is even cracking blackout jokes to warm up the donors. (How many governors does it take to screw in a light bulb? I don’t know, but I’ll give you a $10 billion contract to do it for me…). A serious concern: who exactly is getting the fundraising pitch?
More Blackout Blackmail: "At first, there wasn’t the political will to deal with the problem. The political will is there now, because lights are going out and time is running out." — A Goldman Sachs analyst, quoted in the Wall Street Journal 1/30/2001.
