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

Whining and Dynegy. Dynegy, which paid approximately $356 million to buy California power plants in 1998, announced that its profits in the first quarter of this year–an astronomical $139 million — are nearly double those of last year. But Houston-based Dynegy seems to be in denial about the fact that it owes its windfall profits to having played the California electricity market like a saxophone, whining that it has been "unfairly and inaccurately" accused of shutting down its plants in order to jack up prices, and that its California sales "did not make a material contribution" to its recently gained riches. Prove it. Dynegy should make public both its costs for producing electricity and the prices that it charged during this period in order to prove its claims that it acted properly. And if Dynegy comes out squeaky clean, then we invite the company to join with us in demanding that a windfall profits tax be imposed on those who did engage in market manipulation and have so sullied the Dynegy name. But we’re not holding our breath; if the FERC had enforced its "just and reasonable rates" standard, the folks down there in Texas probably would not have reported such a massive increase in profits.

Who do they think they are? PG&E heads into battle with the Public Utilities Commission today as they demand to be free from state regulation and hope to stop a formal investigation that seeks to determine if their parent company (PG&E Corp.) cannibalized the utility subsidiary during the early years of deregulation. PG&E’s unappealing blend of arrogance and defiance is masked only by the foolishness of their insatiable greed.

It’s OK to get angry, Gov. But save it for the energy companies. According to Senate Republicans, who met with Governor Davis Tuesday, the Gov. "was a little upsettable, frustrated, disoriented." Apparently, in an obscenity-laced tirade, "The panic was very clear in his demeanor." Perhaps the Republicans were just taking potshots at Davis. But it makes you think, maybe if the Governor focused some of his anger on the energy industry villains we’d be in better shape. A few sharp-tongued phrases about a windfall profits tax and eminent domain and, instead of appearing to have "completely lost control," Governor Davis could once again be the toughest Governor in America.

Don’t believe the hype. Despite Gov. Davis’s attempt to blame the increased gouging by the power profiteers on the uncertainties caused by PG&E’s bankruptcy, nobody is buying it. Even the Gov’s trusty soldiers at the Department of Water Resources can’t provide the Governor any back-up on this theory. Rather than acknowledge that the out-of-state generators are squeezing us more and more (estimates suggest that we’ll spend $150 million of taxpayer money each day this summer), Governor Davis wants to scare lawmakers into signing on to his Edison Bailout Plan, suggesting that an Edison bankruptcy would push prices up even higher. No, a Governor unwilling to stand up to the power thieves is the reason for these increases.

Correction: Assembly Speaker Hertzberg does not support the Edison bailout. As you will remember, in Bailout Watch #33, on a tip from a member of the Democratic Caucus, we stated that Assembly Speaker Robert Hertzberg supports the Governor’s colossal capitulation to Edison’s bailout demands. In a recent telephone call to our office, however, the Assembly Speaker voiced his emphatic denial of that report: "it’s just not the case." This is a correction we’re pleased to make.

Judgment Day
565 Days Until November 5, 2002