Bailout Watch #62 – Aug 01, 2001

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

Bailout Watch #62 – Aug 01, 2001

CALpine & CALifornia: Linked by prefix and scandal. Despite the shared prefix and Governor Davis’s apparent affection for the company, the Calpine corporation serves its own shareholders, not the taxpayers of this state. But more than letters link the two, as it turns out. Five DWR consultants were recently fired after they were discovered to own Calpine stock. These DWR employees were instrumental in negotiating contracts that commit the state to buying power from Calpine for 20 years at $73/MwH under one contract and under another contract at $232/MwH for this summer. To allow a company’s shareholders to facilitate contracts between the state and that very same company is an ethical violation of the highest order. And not only did the Davis administration think it unimportant to require these individuals to file economic disclosure statements, but the Governor now continues to stonewall inquiries into the holdings of other top state consultants. Neglect? Complacency? Conspiracy? Is there anything else we should know? (P.S. It was revealed on Tuesday that Governor Davis’ chief spokesman bought $12,000 worth of Calpine stock in June.)

FTCR challenges DWR power grab in wake of growing scandal. The state agency that handed the reigns of power procurement to Calpine shareholders is the very same outfit that PUC President Loretta Lynch proposes to entrust with carte blanche rate-making authority (see BW #60). In a letter to Lynch, FTCR urged her to abandon the far-reaching and ill-conceived plan to irrevocably transfer the PUC’s rate-making power to the unaccountable Department of Water Resources. "The DWR is shrouded in a controversy of its own making, yet, in less than a month, the PUC will vote on an unprecedented hand-over of authority to this agency," FTCR wrote. In light of the recent firings of DWR employees for conflict-of-interest violations and a federal investigation by the SEC, it would be utterly irresponsible to entrust this unaccountable body with the power to reach into Californians’ wallets for years to come.

SDG&E: Scam, Deceive, Gouge, and Evade. As the drama of the state’s electricity debacle unfolded, San Diego Gas and Electric tried to play the role of the innocent middleman. As its customers reeled last summer from 300% increases in their electric bills, the fully deregulated utility said it was merely passing on the costs of dealing with the energy barons. But SDG&E’s story doesn’t check out. According to a report Tuesday in the San Diego Union Tribune, the utility pulled a scam on its own ratepayers. SDG&E had signed contracts securing power at approximately 5 cents per kilowatt-hour. But rather than making that affordable power available to San Diegans, the company sold the cheap kilowatts on the open market at an astronomical markup, gaining a hefty profit. SDG&E then repurchased the power at inflated market rates and passed it — and the full market cost — onto their energy-dependent ratepayers.

Join FTCR’s Blackout Brigades.

Judgment Day
461 Days Until November 5, 2002

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