BAILOUT WATCH: Keeping an eye on the energy industry and the politicians
Bailout Watch #5 - Feb 09, 2001
How much is that doggy in the window?
The utilities want a bailout. But getting another $10 billion will cost ratepayers an average of $1,000, not including interest on the bonds. The chances of elected officials handing that over, on top of last week's $10 billion worth of state credit, have to be pretty close to zero. So now the discussion has turned to an exchange of assets for cash. The utilities are over-valuing their transmission lines so as to negotiate a deal that forces ratepayers to pay off more than 100% of the utilities' losses over the last seven months. The transmission lines would be the crown jewel of a new public power system. But the question of buying those assets should be de-linked from the question of a bailout, which the utilities neither deserve nor require. The latter is driving the former right now. The danger is that instead of taking advantage of the utilities' problems to get the best possible deal on the transmission system, ratepayers will end up getting fleeced again. Meanwhile, why haven't the parent companies been forced to cough up some of the their $30 billion in assets to bail themselves out of the mess they made, a point we've made repeatedly and made yesterday by Sen. Tom McClintock and several other Republican legislators?
The one with the waggly tail.
The utility company execs must be exultant. Having completely screwed up the state and stuck ratepayers and taxpayers with the tab, the utility companies will end up in better financial shape than they have ever been--with excess cash that they can then use to increase dividends and buy more stuff in other countries. Not to mention increase the pay of their CEOs. Perhaps that's why these execs are, amazingly, still in charge of their companies (at their regular multimillion dollar salaries), rather than out on their ears. When you add up the $20 billion that ratepayers were forced to pay them under deregulation during the preceding three and one-half lucrative years + the $10 billion credit bailout last week + the $10 billion bailout of the utilities losses, you get a true idea of what deregulation has done to our wallets = $40 billion, not including collateral damage from blackouts, etc. That's about $4,000 average per ratepayer.
I do hope that doggy's for sale.
Governor Davis also announced that he will pay an "Acceleration Bonus" to power plant developers that get plants on line by this summer. The same companies that caused rolling blackouts, manipulated the electricity market to keep electricity supplies tight, have refused to offer reasonable long term contracts to the state and have profited wildly off of California's deregulation debacle, will be rewarded with a special taxpayer fund set aside to thank them for building new plants with which to gouge us.
"The Power Behind Peace of Mind."
Edison's slogan just doesn't comfort us right now, especially with yet another potential conflict of interest in the Governor's office. Gov. Davis has announced the appointment of Larry Hamlin as his energy construction czar. Mr. Hamlin, who will be in charge of overseeing the Davis's accelerated plant construction process, is an Edison Vice President. Generously, he has taken a leave of absence from Edison to ensure that he operates only with the public interest in mind…
Calling Mario Puzo.
"This is strictly business" -- the head of the power generator lobby, on why his energy companies clients, who have jacked up electricity prices thousands of times above their costs, intend to drive a hard bargain in contracts with the state. (SF Chronicle, 2/3/01).