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

Public to Utilities: "Anything you can do we can do better." Skyrocketing electric bills. The looming threat of blackouts (well, sort of looming). Utilities on bankruptcy alert. What’s a community to do? The answer is abundantly clear to Californians. Sick and tired of being abused by electricity profiteers, citizens are demanding local and not-for-profit management of their power supplies. Nearly two-thirds of Californians support the idea of local governments stepping in for investor-owned utilities, according to a poll conducted by the Public Policy Institute of California and reported in the Sacramento Bee. Dozens of cities and districts in California have relied on public utilities for years, and now, with the utter failure of deregulation and the corresponding breakdown of the private utility system, the idea is spreading from the cities of Davis and San Francisco to deregulation’s ground zero, San Diego. Legislative proposals in Sacramento would streamline the process for making power public. But it won’t be easy for these communities to wrest control from the power companies, who, in a crass effort to squelch local self-determination, are spending big money to maintain their hold over the flow of electrons.

The other MOU. Everybody knows about Edison’s bailout deal with the Governor (known as the Memorandum of Understanding, or MOU). Much less analyzed, however, is the deal the Governor struck with Edison’s southern neighbor, San Diego Gas & Electric. SDG&E, which reportedly gouged its own customers last year (see BW #62), has been adding up their alleged losses as a result of deregulation, just waiting to slip those charges on to ratepayer bills. Despite profiting off of the dysfunctional marketplace itself, SDG&E pointed to outrageous energy prices and claimed to have accrued a bank-breaking $750 million debt. So, in walks the Governor and out comes an MOU, neatly crafted to give SDG&E lots of cash and Davis a press release proclaiming that San Diego customers won’t face rate increases. Of course, the agreement calls for the state to purchase SDG&E’s transmission lines at the ultra-inflated price of $1.2 billion — while that’s about $750 million above the book-value of the grid, SDG&E says the transmission sale is unrelated to the supposed $750 million debt (the Governor just happened to be shopping for a power grid). In summary, for SDG&E and parent corporation, Sempra, deregulation is paying off coming and going.

You can’t put out a fire with oil. Funny thing happened on the way to Washington, D.C. The national energy plan, initially trumpeted by President Bush-Cheney as a solution to California’s energy crisis, seems to have forgotten California. There was a time in late spring when Congress was talking about strong price controls over the electricity system and assurances that energy companies would not be allowed to lay waste to California. But the bill that passed the House this week is mostly about drilling and polluting (specifically, making it easier to do both), with some tax breaks for the nuclear power industry as well. For California consumers, however, the plan is a joke. Bush-Cheney took the California crisis˜created by the energy companies˜and exploited it to justify handouts to the profiteering energy industry at great public expense. Lesson: Make sure you know who’s working at the Fire Department before you call 911.

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Judgment Day
459 Days Until November 5, 2002