BAILOUT WATCH: Keeping an eye on the energy industry and the politicians
Bailout Watch #26 – Mar 28, 2001
View today’s BW Cartoon: Davis Drives State Into The Perfect Storm
Giveaway Gray on the Electric Chair. As Gov. Davis will soon learn, "ignorance is no defense." The Gov promised us no rate increases. And while the PUC promises that the majority of the rate hike will be imposed upon large energy users — who pushed for deregulation in the first place — the impact on the economy of a forty-percent hike in utility rates will be disastrous all around. As everyone now recognizes, there is no plan to protect us in the short term against the wholesale energy gougers. The rate increase just puts more billions on the table for them. We simply cannot afford to pay blackout blackmail.
What is needed is PUSHBACK. An ultimatum to the energy cartel: refund overcharges and reduce rates or you’ll face a windfall profits tax. Respond with blackouts, we seize your plants. Davis talked tough in January, but now he’s woosy-ing out. According to AP: "a spokesman said Davis is no closer to invoking eminent domain than when he broached the idea in his [State of the State] address. ‘It is a disastrous idea and something the governor would only explore as a last resort,’ spokesman Steve Maviglio said. ‘Everything we have done to date has been to avoid that action.’" What? Everything he has done to date has been to protect Gray Davis.
Broken promise of deregulation. When they passed deregulation, they promised us that after we paid off the utilities bad debts — $20 billion so far — we’d get a 20% rate reduction. Now we’re facing a 40% rate increase. A 20% reduction is the standard by which the PUC and lawmakers will be held accountable in 2002.
Wall Street misses boat on the bailout. The utilities’ stocks soared on news of the increase. But read the PUC order and you’ll see that this money is going to be used to purchase power going forward. There is no allowance for paying the utilities’ past debts. And the PUC is going to order the holding companies to bail themselves out. In a column in today’s Wall Street Journal, Holman Jenkins gave some long overdue and withering attention to Edison CEO John Bryson’s role in promoting deregulation. Jenkins noted the CPUC decision effectively tells the utilities to "drop dead."
View today’s BW Cartoon: Davis Drives State Into The Perfect Storm
Countdown to Judgment Day
587 Days Until November 5, 2002
