BAILOUT WATCH: Keeping an eye on the energy industry and the politicians

FERC-gotten. The Federal bureaucrat in charge of mediating a settlement between the State of California and the private power companies that have gouged California says that the State is due virtually nothing. Despite the fact that Californians are paying about $20 billion more for energy this year than last and more than $40 billion more than in 1999, Administrative Law Judge Curtis Wagner has offered a power company-derived formula for refunds that is unlikely to get the state more than $716 million. As outlandish as that may seem, Wagner went even further, indicating that the refunds might be less than what the state currently owes the power generators so even that paltry sum may never be handed over. The lesson is simple: the Bush administration has written off California; let’s not fool ourselves by depending on FERC to have some consumerist epiphany and, instead, let’s take this problem we have with the power profiteers into our own hands.

Now’s the time to pull out the hammer, Governor. Since the Federal Government has failed us, as we feared it would, Governor Davis has no choice but to pull out all the stops and fight for California. Namely, he should throw his weight behind the Windfall Profits Tax legislation (SB 1xx by Senator Soto), which will provide refunds in the form of a taxpayer credit for unreasonable power charges that the power companies have forced upon us this year. The proposal says that any power charges above what is determined to be reasonable (the companies get a fair profit) are taxed 100% (on the unreasonable amount). This would make it economically irrational for power companies to gouge us again. Everybody and their dog knows that the FERC and Bush administration will not address the wholesale profiteering, but Governor Davis continues to spend his time and our money pointing the finger at the Feds. The out-of-state generators, of course, are happy to dilly-dally in DC, because the FERC is on the power companies’ side. The Gov. can point until his finger falls off or he can take off his sport coat, roll up his sleeves and fight the generators with the powerful protection of a Windfall Profits Tax. Call the Governor and demand that he pull out the Windfall Profits Tax Hammer.

If you liked deregulation, you’ll love AB 57. Assembly Bill 57 (Wright), which Cal. lawmakers passed out of the Senate Energy committee yesterday, removes the basic reasonableness review that the PUC conducts when utilities and generators (what a pair!) sign power contracts. This bill establishes a "market-based" scheme that, if followed by the utility, would pre-determine that the contracts are reasonable and, therefore, the entire cost of the contract including the negotiation costs can be passed through to ratepayers. This means that consumers will pay whatever deal the utility gets for you without any meaningful public recourse in case they get a bad deal. If you’re wondering who are the proponents of such a bill: Edison, PG&E and SDG&E. (Surprised?) So, unless you’re pleased with the current world without energy oversight, you should be worried about this bill. With utilities like these purchasing power from companies like Enron, Reliant and Duke, we need all the oversight we can get.

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Judgment Day
482 Days Until November 5, 2002