Two Assembly Bills and Senate Bill Rushing Through Legislature Would Transfer Billions to Edison

Sacramento– Lawmakers are expected to vote Wednesday on three proposals to bail out Edison. Two of the proposals, Assembly Bill 82 2X (Keeley) and Assembly Bill 83 2X (Wright) impose a new bailout tax on residential and business consumers, while Senate Bill 78 2X (Polanco) places the entire bailout onto the bills of medium and large businesses in the state. The bills were made publicly available on Friday, July 13 (AB 82 2X) and Tuesday, July 17 (AB 83 2X and SB 78 2X as amended). Consumer advocates note that much of the bailout money handed over to Edison under the plans would be used to pay off energy companies for power they sold at unconscionably high prices during the last six months of 2000.

“None of these proposals increase the reliability of our energy system or stop power generators from profiteering in California,” said Doug Heller a consumer advocate with the Foundation for Taxpayer and Consumer Rights (FTCR). “By focusing on a bailout, lawmakers and the Governor are working to protect Edison and power companies instead of the consumers and businesses who have been ripped off by this deregulation nightmare.”

Good Cop, Bad Cop

Assemblyman Rod Wright, Chair of the Assembly Energy Committee, introduced his bill (AB 83 2X) with Assemblyman Richman on Tuesday and acknowledged that the proposal is a bailout of Edison. Consumer advocates with FTCR are concerned that the legislative maneuvering may be used to push lawmakers to support the bailout contained in AB 82 2X simply because it is considered “less bad” than Chairman Wright’s proposal. FTCR argues that no utility bailout is acceptable for the consumers of California and that “less bad” is still too bad for the public and unworthy of support.

“Just because one bailout plan is extremely offensive, it does not justify the default acceptance of another bailout. With all the costs associated with the failure of deregulation, Californians cannot afford to spend another five to seven billion dollars to solve one companies’ financial crisis,” said Heller.

All Californians will pay for bailout on electricity bills or through higher consumer costs (or both)

AB 82 2X, of which Speaker Hertzberg is a co-author, requires all ratepayers to pay a “nonbypassable” bailout tax for two years, after which the tax will only be levied against businesses, farms and larger taxpayer and non-profit funded agencies such as hospitals. With the purchase of Edison‘s transmission lines and certain amendments, FTCR estimates the total cost of this bill to be approximately $6.2 billion. While many of deregulation’s chief advocates in 1996 were some of the big businesses that AB 82 2X would require to shoulder a larger share of the deregulation-derived bailout, those costs would inevitably be passed onto consumers in the form of higher retail costs of products and services. Similarly, SB 78 2X, which requires a maximum $2.5 billion bailout of Edison by businesses would lead to unjustified higher consumer costs across the economy. AB 83 2X would have all ratepayers share the entire cost of the bailout; FTCR estimates the cost of AB 83 2X to be $5 billion with interest.

Additionally, all three proposals would restrict the Public Utility Commission (PUC) from lowering Southern California Edison‘s authorized rate of return (regulated profit) for five to ten years.

“Too much is at stake with these three bailout plans and the future of our energy system that lawmakers should not ramrod the proposals through the Legislature in less than one week,” said Heller.

###