Bailout Watch #60 – Jul 25, 2001

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

Bailout Watch #60 – Jul 25, 2001

Last Wednesday, the California Public Utilities Commission (PUC) issued a proposed "Rate Agreement" with the California Department of Water Resources (DWR) that would virtually cede control over energy rates to Governor Davis and his DWR agency. The plan might as well be called Davis’s Wild Ride as it would turn the PUC into nothing more than a rubber stamp for the excesses and inefficiencies of the Davis administration. Granting such dictatorial status to any organization is absurd, unjust and unacceptable. Although its official name is the Department of Water Resources, that bureaucratic title doesn’t do justice to the expensive and unscrutinized activities of this previously obscure state agency. We propose a renaming.

DWR — Don’t Wait for Review. The plan proposed by the PUC at the behest of the Governor gives the DWR carte blanche authority to approve any rate increase it deems necessary, whenever it chooses, with as little as 30 days notice to the public and no review for reasonableness. The proposal exempts the DWR from decades-old laws and procedures designed to protect consumers’ interests from "unjust or unreasonable rates," thereby canceling both the public’s and the PUC’s right to question its conduct or decisions. Whatever the DWR requests, according to this proposal, would be automatically granted, irrevocable and payable by consumers upon demand.

DWR — Decimating the Wallets of Ratepayers. The DWR has been at the center of the California Energy Crisis ever since the Legislature made it the default power buyer for the state of California last winter. This office has spent billions of taxpayer and ratepayer dollars in the last six months and it has done so without public oversight. The DWR’s legacy will include the largest rate hike in California history and twenty years of power purchased at prices much higher than current market rates (the trend in electricity prices is downward, so this will only get worse).

DWR — Don’t Worry about Rules. This agency finds itself in the middle of a firestorm after hiring a number of high-priced consultants, some of whom own stock in the energy companies from which they are buying power. The Governor is now asking them to sell off their investments but it’s a little late, as we have already signed contracts with their companies valued at $43 billion (and possibly much more). Had the DWR followed standards of government ethics, these consultants would never have been spending public money with such clear conflicts. P.S. Some of the highest level consultants at DWR still have not filed their conflict of interest reports.

Message to PUC: Don’t Willingly Resign. The public cannot afford to have an energy system that is totally oblivious to standards of accountability. The PUC should fight to preserve its duty to protect the public rather than cede this role entirely. The lack of oversight inherent in deregulation got us into this mess; it’s absurd to argue that less accountability will get us out of it.

Dodging the DWR. San Diego was the first victim of the deregulation debacle, and now the county is fighting to be the first to pull itself out of the mire. Of course, the power industry giants are fighting the county’s legislative efforts to create "one of the largest municipal utility districts in the nation," according to the San Francisco Chronicle. If it is successful, however, San Diego would be able to bypass the Dep’t for Waylaying Regulation and develop a local power agency that is both public and accountable.

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