BAILOUT WATCH: Keeping an eye on the energy industry and the politicians
Bailout Watch #54 – Jun 19, 2001
President Bush talks his way out of a jam. The Bush administration is in the awkward position of desperately needing to talk about helping Californians out of this deregulation crisis without offending the deregulation ideologues who believe that the failed unregulated energy market will resolve itself. The Prez. described his administration’s decision to impose quasi-price controls this way: "They’re not talking about firm price controls. They’re talking about a mechanism … to mitigate any severe price spike that may occur, which is completely different from price controls." Unfortunately, the statement is pretty accurate, though it might be more appropriately said this way: "We need price control and market regulation, but instead we’re giving you a toothless price cap based on the most expensive and least efficient plants, which is completely different from price controls."
FERC Fun Facts. The Fed. Energy Regulatory Commission moved to establish price caps (see above), ostensibly to address the price spikes associated with the alleged energy supply imbalance in California, which is blamed alternately on environmentalists, the State Public Utilities Commission and consumer groups like FTCR. Interestingly, as the LA Daily News reports, FERC sided with Edison in 1995 to block the construction of new Cal. power plants that were proposed by the CPUC and would have added 1,400 Megawatts of new generating capacity.
The state to overpay for San Diego’s power lines; another Gray Davis success story. In terms of spin, Governor Davis takes the cake for his description of the deal that has been secretly crafted between San Diego Gas & Electric and the State of California to buy the utility’s transmission lines. According to the Gov.: "As a result of this agreement, the (ratepayers) will not have to make a balloon payment. The entire $747 million of balloon payments have been zeroed out completely without a rate increase." What he means to say is that because the State has agreed to buy SDG&E’s power lines at such an inflated price, the bailout will be far more difficult for the average consumer to find on their bill. But don’t worry, it will be in there.
Loooooooong-Term Contracts. The public got its first look last Friday at the long-term power contracts that Governor Davis has been signing us up for over the last couple of months. Some important portions have been blacked-out of the *********** public copies. We can only guess that the real price for some of the power will shoot up to ******* ***** per megawatt-hour. We do know that we’ve bought a lot of power at prices that will prove to be ridiculously high within ******* years, and probably sooner. There are also provisions that appear to require the public to pay the costs of any windfall profits tax that the Legislature might impose, pay the pollution fines for dirty power plants, accept without further review that the prices are just and reasonable, pay for power even if we can’t use it and ****************.
This is not a prophecy, this is just a warning. Blackouts may be coming. The government has notified us that within 48 hours we may face rolling blackouts. The impending Summer of Doom may be closer than we’d like to know. And it is heating up, not only across the state, but, specifically, in Sacramento. On Tuesday 6/19/01) the State Senate will conduct its first hearing on the Gov.’s plan to bail out Edison. (Which makes it time to call or write your local Senator.) Of course the power companies that hold the key to our energy system’s reliability want a full bail out because it means that they’ll get paid for their overpriced power. The generators like to make lawmakers sweat a little (and the rest of us, too) as they approach this bailout vote, so let this be a warning: you may, for some reason, experience rolling blackouts this week. You can blame the heat, but we’ve survived hot summers before, or you can blame the cartel, but either way, don’t forget to call the politicians; we have to turn the heat up, too.
Join FTCR’s Blackout Brigades.
Judgment Day
504 Days Until November 5, 2002
