Bailout Watch #55 – Jun 22, 2001

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

Bailout Watch #55 – Jun 22, 2001

Edison Bailout Hearing in Sacramento: Bailout NOT DOA. In a mid-afternoon hearing held by the Senate Energy Committee on Tuesday, Gov. Davis’s proposal to force ratepayers to bail out Edison had its first hearing. Like the original deregulation legislation, the bailout proposal — SB X2 78, authored by Sen. Richard Polanco, available on line at — is a ridiculously convoluted blueprint with dozens of anti-consumer provisions contained in its fine print. FTCR’s critique is available at FTCR testified against the measure, along with representatives of Consumers Union and TURN, noting that in the initial ninety-minute presentation by the Gov’s office and Edison’s lobbyists, not once did they provide any reason why the deal would be good for ratepayers — because it isn’t. Residential and small business ratepayers have been the deep-pockets for deregulation since it first passed, allowing Edison, PG&E and SDG&E to reap tens of billions in windfalls, and now that deregulation has failed and the utilities have lost some money, the utilities want ratepayers again to be the deep pockets that will bail them out. Most observers think the Governor’s proposal is DOA. We think so. But that was just Edison’s opening gambit, a deal so bad that anything else will be portrayed to voters as an improvement by subservient (or termed out) legislators. Referring to Edison’s massive lobbying campaign in Sacramento, Edison’s General Counsel told company investors: "We’re starting to see the fruits of all that labor."

Wall Street: Leveraging the Bailout? The state will soon ask Wall Street to buy $13.4 billion worth of bonds, which in turn will reimburse the state for the $9 Billion purchase of electricity it has made since January. Ratepayers will then pay off the bonds, with interest, for fifteen years. Pro-Edison bailout supporters are spreading the word that Wall Street won’t buy the bonds if the Legislature does not approve the Edison bailout. In other words: if you don’t bail out Edison, the bonds won’t go and the state will never be repaid. Since there is no financial connection or economic relationship between the power bonds and the Edison bailout, we think this argument is being manufactured by Edison’s lobbyists and lawmakers. But look for an increase in this kind of lying and propagandizing from the Edison pigs at the ratepayer trough.

FERC-get about it. Now that everybody on earth has shouted about the failure of the Federal Energy Regulatory Commission (FERC), and now that FERC has issued its toothless price caps plan, it is time to end the diversion and get back to business here in California. The FERC plan sets "soft" price caps (soft because they can be exceeded) based on the price charged by the least efficient power plant, using the most expensive fuel during the most recent Emergency Alert. It is analogous to using the worst performing school districts as the basis for national education standards, and it will do nothing about the consistently overpriced power that California has faced for the last 12 months. It won’t get us our money back and it won’t stop the gouging, either. The plan is nothing more than political cover for politicians and bureaucrats in DC who care more about saving the idea of energy deregulation than they do about the real impact of its implementation. So Governor Davis, come on back to California and get ready to sign SB 2x 1, The Windfall Profits Tax, because we’re gonna need it if you really want to get our money back and effectively contain power prices.

The Governor is working for Edison. The Governor is using tax dollars to pay two DC political consultants $30,000/per month to "advise" him on energy issues. Now it turns out that they both had been on contract with Edison in the past year. To recap, California taxpayers are paying professional spinmeisters, who are also recent Edison consultants, $180,000 for a six month gig to secure a bailout of Edison and improve the Governor’s poll numbers at the same time. How did they spin that? According to a Davis spokesperson, it’s not a conflict of interest because "Edison and the Governor’s Office have the same goal."

Join FTCR’s Blackout Brigades.

Judgment Day
501 Days Until November 5, 2002

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