BAILOUT WATCH: Keeping an eye on the energy industry and the politicians
Bailout Watch #67 – Aug 17, 2001
From Regulator to Regulated in two easy steps. First, use your high-power government job to allow corporations to make billions more than they should. Then, resign. Curt Hebert’s seat at the Federal Energy Regulatory Commission (FERC) was still warm when the energy regulator-in-chief announced his move to the ranks of the regulated as an executive at Entergy Corporation — a private power producer under the FERC’s regulatory purview. As chair of FERC, Hebert’s anti-enforcement policies made the commission look like an industry front group. Hebert stubbornly resisted rate relief for California, and tirelessly championed the very policies that laid waste to the state’s economy while enriching private companies. By stepping through the revolving door between government and industry, Hebert makes public service look like a pre-corporate incubation period. The public trust is violated when officials like Hebert treat government jobs as stepping stones to more profitable, consumer-gouging enterprises.
Why do they call it a REVOLVING door? Because they get us coming and going. While Hebert is enjoying the corporate digs, the energy industry is sending new troops into the regulatory agency. Pat Wood, FERC’s chairman-to-be, plans to enlist energy company employees to be his regulatory watchdogs. "The best kind of hire would be someone who has done this on the other side," Wood told the SF Chronicle. As Californians worry about the impact of energy company shareholders signing power contracts in Sacramento, it’s worth worrying about what happens in DC when energy industry employees are entrusted with the responsibility of regulating their former (and future?) employers.
Edison customer newsletter: History Blackout. The August edition of Southern California Edison’s Customer Connection newsletter features a "Did You Know" section that states:
"the movement to deregulate California’s electric industry was started in the mid-1990s by state regulators in response to large energy users, who believed competition would result in lower retail rates… SCE and other utilities strongly opposed the idea."
But wait a minute–in 1995, before the deregulation law had even been drafted, Edison CEO John Bryson was quoted in the Los Angeles Times as saying that the deregulation plan proposed by state regulators was "the best, soundest way to move to a desirable competitive market that will benefit all customers." He also praised the actual dereg law in 1996. If Edison wanted to give its customers an accurate representation of California’s jaunt over the cliff of deregulation, it might read like this:
"Did you know that… California’s three private utilities, including Edison, joined big energy users to ramrod deregulation through the state legislature and succeeded in getting the legislature to freeze customer’s rates at 50% above the national average, despite plummeting wholesale energy prices, in order to collect $20 billion in surcharges as of June, 2000? And did you know that SCE’s parent company pocketed this overcharge revenue and invested in lucrative global operations benefiting Edison International’s shareholders?"
Leave us alone already. First, Wall Street joined in the chorus calling on California to deregulate. Next, Wall Street told California to bail the utilities out of the mess created by deregulation. And on Tuesday, a Wall Street analyst told Bloomberg News that state utility regulators should have "very little" oversight regarding rate increases. Thanks for the advice… but no thanks.
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