Bailout Watch #29 – Apr 03, 2001

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

Bailout Watch #29 – Apr 03, 2001

State utility expert says no rate increases are needed. When the Cal. Public Utilities Commission (PUC) voted to increase rates last week, it did so against the recommendations of PUC Administrative Law Judge Walwyn. In a 75 page proposed decision, ALJ Walwyn properly noted that "Since April 1998, ratepayers have paid billions of dollars in excess of market costs to support recovery of utility transition costs. Ratepayers did not cause the utility liquidity problems, have not benefitted from electric restructuring, and should not bear the cost recovery risks imposed by AB 1890." Instead, the PUC substituted this no-increase decision with one that created the largest rate increase in Calfornia history. Contrast the 46% increase that will be show up on consumers’ bills in coming months with the conclusion of the staff experts in the ALJ’s proposal: "we find no basis for granting the requested rate increases of PG&E and Edison."
Power companies are "part of the solution," they tell us on their fancy website The site also tells us that experts "who have closely examined the events of [last] summer, all agree that no market manipulation by generators can be documented." (Well, that is entirely untrue, but who’s checking?) In fact the real profiteers, they tell us, "were the Los Angeles Department of Water and Power, U.S. Federal Government, the State of Arizona, Western Utilities, and British Columbia Hydro." Other than a side comment, they don’t mention that the energy producers have made a few dollars off this crisis themselves. According to company and other public data, Duke Energy Services profits were up 374% last year, Dynegy Marketing & Trading– up 195%, and Joe Bob Perkins’ company, Reliant Wholesale Energy, saw its 1999 operating income of $27 million rise to $482 million in 2000 (that’s about 1685%).

Speaking of profiteers, everybody loves Calpine.
(Especially its shareholders). For some reason politicians seem to like Calpine, one of the few California-based members of the energy cartel. The company, we are told, cares about California and signed long term contracts early on and have plans to build new plants. But their profit forecasts show that they don’t shy away from gouging. According to the company, Calpine expects to report net income of approximately $645 million, compared with $324.7 million in 2000. Just about double. And, according to AP: "Since California deregulated its electricity market in March 1998, Calpine’s stock has gone up by 25-fold, creating $15 billion in shareholder wealth." Now that may be great for their shareholders, but it doesn’t say too much about their attitude toward California consumers and taxpayers. Sure they’ll sign more contracts and build more plants, more with which to gouge us.

Judgment Day
581 Days Until November 5, 2002

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