Bailout Watch #65 – Aug 10, 2001

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

Bailout Watch #65 – Aug 10, 2001

Davis’s Department of Disregard. Recently, the DWR could be seen warming up for its role as the Governor’s autocratic rate making agency, as it refused to open its power purchases to public scrutiny. The Department (whose forecasts have contained a series of bloopers) is demanding that ratepayers hand over $12.6 billion for power in the coming months, but won’t give any indication of where the money will go. This disdain for public oversight is offensive in its own right, but becomes downright galling in the face of the DWR’s recent scandals, which include charging taxpayers for thousands of dollars in staff meals (see Bailout Watch #61) and hiring power company shareholders to negotiate electricity purchases (see Bailout Watch #62) with their own company. One would think that the Davis administration, pressing the PUC to hand over rate setting authority to the secretive DWR, would attempt to give the agency a positive image–for political reasons, if for no other. Instead, California has been subjected to the spectacle of a public agency that operates in private, revealing nothing but disregard for the taxpayers and ratepayers of this state.

The power companies’ defense: "Everyone was gouging." The private power producers have been crying (all the way to the bank) for months now about all the criticism of their price gouging, market manipulation, and general bad behavior. But what’s the best argument they can make in their favor? "We’re not the only ones" seems to be the winning slogan; the power companies’ trade group released a report Wednesday that seems to say, "Sure, we took California for a ride, but so did the Los Angeles Department of Water and Power." (But officer, I’m not the only (hiccup) drunk driver on the road.) The power companies state that the average price from all sellers during the first quarter of 2001 was $282/MwH–an outrageous price, considering that electricity used to go for approximately $30/MwH. Some of the private companies charged more on average, some charged less–and the same can be said of the public agencies. But the private companies, in their attempt to smear public power, unwittingly make the case for it. The point is that who owns the power plants does make a difference; when selling outside of Los Angeles, the DWP functioned and acted like a private power company. In a deregulated market, when the ratepayers and power plant owners are different people, price gouging is the result. Surely, the ratepayer/taxpayer owners of the DWP have not seen rate increases and remain shielded from deregulation profiteering.

Key Word "Public" in Public Power. As Governor Davis moves to make official the State’s new Public Power Authority next week, he must remember what the word "Public" in this new Authority signifies: Public Process, Public Accountability, Public Involvement, Public Interest and Public Protection. The secrecy that has surrounded the Davis administration must give way to an open, accountable power system. Following months of gouging and rolling blackmail by power companies, ratepayers need a power purveyor that will let the public interest — not corporate interests — dictate the future of California’s energy operations. The California Power Authority should become a national standard bearer for reliable, affordable and clean energy. But for the Authority to live up to its potential, it must be public in fact–not just in name.

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