BAILOUT WATCH: Keeping an eye on the energy industry and the politicians
Bailout Watch #31 – Apr 11, 2001
D.O.A. or R.I.P.
Yes, it’s a bailout. It would be a flat-out lie to say that Governor Davis’s deal with Edison is anything other than a massive, unadulterated, ratepayer-funded bailout of Edison. Under the Memorandum of Understanding penned by a panic-driven Governor Davis and a greed-driven Edison CEO, John Bryson, Californians will:
* be forced to pay a multi-year, multi-billion bailout tax of at least $5 billion to cover Edison’s self-inflicted wounds (the deregulation law it wrote, company mismanagement and greed);
* prohibit the PUC from holding Edison’s parent corporation responsible for returning the $4 billion it siphoned out of the utility, except for a miniscule federal tax refund it already owed;
* strip from the PUC its regulatory power to hold Edison’s profit levels to reasonable levels in the future;
* overturn a PUC decision that rules that Edison had no right to include billions of dollars of Edison overcharges for power in their alleged "undercollection;
* end up in 2010 with the electricity system fully deregulated, while we pay off its costs for decades;
* overpay by 230% for Edison’s portion of the crucial transmission grid. Without the assurance that we can get PG&E’s grid, we’re buying, to use Sen. John Burton’s historic expression, a $3 billion hot dog — but getting only the bun.
From the "you call that a concession?" files: Throughout the MOU, Edison’s alleged givebacks amount to nothing that we don’t already have or nothing we could not already do and in some instances just plain nothing:
* "Edison generation will be sold at low-cost rates for 10 years." Wake-up Governor, we already regulate that generation and there was no chance we would deregulate it next year as previously called for.
* "Edison will dismiss a lawsuit." We are going to win that suit, in which the utilities argue that the deregulation law they wrote is invalid and they can retroactively stick us with their recent debts.
* "Commit power from Edison’s unregulated Sunrise plant at a fixed price for 10 years." Commit it at a cost-plus profit price and we’re talking, but this is just a long-term contract. That’s a benefit for Edison, not the public.
* "Conservation easements on Edison’s watershed land." Whoops. The MOU allows Edison to build tele-communication lines, continue logging, expand sewer lines on the lands. That easement is a bit too easy on Edison.
* "Edison Int’l will refund $400 million to Southern Cal Edison." That’s mostly for a tax overpayment by the utility and pales in comparison to the $4billion they took from the utility.
* "Edison will make $3 billion in capitol improvements." Once again, read on: "…provided that Edison will receive a return of and on equity in retail rates rates as provided in Section 11 hereof." In other words, this concession earns Edison stockholders a 11.6% profit on the improvements. Again, not a concession, a victory for Edison.
The three Bs. Governor Davis promised us that he would protect us from Blackouts, Bankruptcy and Bailouts. Lo and behold, like earthquakes, fires and floods, we get them all.
DOA/RIP. If this passes the Legislature, it’ll be R.I.P. (Reversed In Proposition) at the ballot box next year.
Definition Dept. Dedicated Rate Component or DRC — noun 1. An unabashed bailout tax. 2. A surcharge on consumers’ bills to pay Edison bonds sold to recover past losses. 3. Davis Re-election Cancelled
573 Days Until November 5, 2002