BAILOUT WATCH: Keeping an eye on the energy industry and the politicians
Bailout Watch #66 – Aug 15, 2001
All Quid no Quo. For months, Governor Davis has assured Californians that he is not pursuing a bailout of the utilities, but something more akin to a buyout: ratepayers give the beleaguered utilities fast cash, the utilities give Californians assets in return (hydro-electric plants, stock warrants, the power grid — something). Of course, the Governor was always willing to give far too much in exchange for far too little. But in the latest iteration of the bailout plan (it always was a bailout, really) in the Assembly, the notion of an actual transaction is entirely absent: it’s all give and no get, according to the San Francisco Chronicle. Originally, Davis’ plan called for the state to receive Edison’s transmission lines — at an unacceptably inflated price — in return for a ratepayer funded, long-term bailout tax (See BW #31). Subsequent legislative versions of the plan varied only in the amounts to be paid, and by whom. Now, it seems, the "get" is gone, as the sale of transmission lines is apparently off the table. Giveaway Gray must finally admit that the so-called "buyout" has become a full-fledged bailout after all.
Lights! Camera!…Hold on, where’s the Governor? The Governor, who never misses an opportunity to stand outside a newly opened power plant with TV cameras in tow, missed his cue Monday when California opened its new public power system. Created by legislation signed earlier this year, the California Power Authority is the most significant energy policy change since California began its ill-advised foray into deregulation. The agency — authorized to build, own and operate California plants, promote conservation, even seize power plants by eminent domain — could be the chief long-term tool the state has to reign in power company abuses and to lower energy costs. But instead of highlighting this major move away from deregulation and towards a not-for-profit, publicly accountable energy system, the Governor issued a dry press release and nothing for TV. The power companies want the public power authority on the cutting room floor, so we need a strong performance from here on, Governor.
California vs. Power Companies. Lawmakers who want to protect California consumers from out-of-control energy companies should put on their boxing gloves and get ready for a 15-rounder; next Monday’s legislative hearing of a bill entitled the "Windfall Profits Tax" (SB2X 1 – Sen. Soto) is sure to be a bruiser. Deregulation has provided an anarchic arena for the avarice of power companies, permitting them to increase prices by as much as 13,000% over previous years, and those companies will fight to keep it that way. On Monday, August 20, the Cal. Assembly Revenue and Taxation Committee will vote on SB2X 1, which would refund to taxpayers billions of dollars carted out of state by power company heavyweights. The bill would also reclaim overcharges by power companies in the future by allowing generators a fair profit on their power sales, but taxing them when they gouge us. By holding the generators accountable when they profiteer the state can make it economically irrational to turn the dysfunctional energy market into their corporate slush fund. All of which means, of course, the politicians will show whose corner they’re in when the power companies come out swinging next week.
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