Bailout Watch #16 – Mar 01, 2001

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

Bailout Watch #16 – Mar 01, 2001

"Victims of deregulation."

That’s what Edison called their shareholders in a recent edition of Edison News, the corporate newsletter for employees and retirees. "In short, our shareholders have literally been pummeled by deregulation…" Actually, Edison International stock ($14.90 at close Wed.) is off only about 3% from its July 1996 price ($15.375) — quite a bit better than blue chip AT&T, which is off about 17% from five years ago. And not only that — Edison increased its common shareholders’ dividend in 1998, 1999 and again in 2000, yielding a 12% increase since the passage of the deregulation law. For CEO John Bryson, who owns approximately 77,000 shares of Edison stock, that "pummeling" increased his dividend income by $7,000 last year.

Reds Infiltrate DWP.

That’s what FERC chairman Curt Hebert seemed to imply when he denounced proposals for the state of California to take over the transmission grid as the first steps toward "nationalization," warning that it would be "against the best interests of the American public." But in dusting off such anachronistic cold-war terminology, Hebert ignores the ideologically neutral fact that, unlike the investor-owned utilities, publicly-owned municipal power agencies, such as the Los Angeles Department of Water and Power and the Sacramento Municipal Utility District, have delivered reliable and affordable kilowatts to their customers in the midst of deregulation’s chaos. Mr. Hebert, you’ve gone too far.

Fortunately, Duke Energy can live with it.

On word that it may take a month for Governor Davis and PG&E to come up with a bailout package for that company, a Duke spokesman told the SJ Mercury News: "Clearly the sooner the better, but we can live with it." Well, of course they can live with it. The company, along with other energy producers, have refused to sign any reasonable energy contracts with the state until the bailout deal is completed, which means the state must buy the net shortfall of power from these companies on the outrageously expensive spot market. The $400 million that PG&E and Edison owe Duke is, in effect, getting paid with interest by overcharging the state Department of Water Resources for spot market energy procurement. (Of course, Duke will still demand 100% payment from the utilities if Governor Davis signs bailout legislation.)

Can’t turn the night lights on? Never fear, Edison (Security) is here.

Governor Davis recently placed restrictions on the use of night time lighting by businesses throughout the state, creating an added need for evening security. That means new business for Edison, which recently took over Westec, a private security company that patrols both residential and commercial properties.

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