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

BAILOUT BLOCKED

Edison’s nine-month campaign to force ratepayers to pay over $6 billion for its deregulation losses came to an end at 12:39 am Saturday morning. As exhausted "Bailout Watchdogs" looked on, the California Senate refused to approve the Assembly version of the bailout, which would have cost residential and small business ratepayers tens of billions of dollars more and blown a hole in the state budget. The Legislature then adjourned for the year. An angry Gov. Davis promised that he would force the Legislature back in October to bail out Edison.

The People take on the biggest and win (for now). By the end, the Edison bailout forces included lobbyists for the biggest businesses in the state, the wholesale energy companies whose gouging created the crisis, and many other special interests. Up against them were tens of thousands of you — volunteers who weighed in by email, telephone, letter, fax — most of whom have followed the deregulation debacle through this newsletter. Dozens came to Sacramento to join Oaks Project volunteers as "Bailout Watchdogs" — a constant, and powerful, presence in the halls of Sacramento since late August, armed with video cameras and yellow armbands. The victory was especially pleasing for the Oaks, who worked to stop the deregulation disaster in 1998’s Proposition 9, only to be crushed by the $45 million spent by Edison and the other energy companies. The bailout that Edison and the lobbyists thought was guaranteed — the utilities have been spending a record $2 million per month lobbying Sacramento — was defeated by regular people who said enough is enough. Our congratulations on a job well done. (To learn more about the powerful Oaks Project, call 310-392-0522 x311).

Senator John Burton, Hero. This year’s energy debacle tested the state’s leadership and lawmakers as never before. Some came through for the People; others did not. But the hero has to be Senate President John Burton. Throughout this difficult year, Burton has been steadfast in his protection of ratepayers against the costly collapse of deregulation. And he successfully shepherded legislation, sponsored by Treasurer Phil Angelides and supported by consumer groups, to create a public power authority that will protect California’s economy against price-gouging in the future. Burton is truly a hero for the state’s taxpayers and ratepayers.

Meet the Villains. The effort to bail out Edison was led by legislators who, by virtue of term limits, cannot run for re-election next year (but all of whom hope to seek higher office): Assembly Speaker Robert Hertzberg (San Fernando Valley); Assembly Energy Committee Chair Rod Wright (LA). Pushing the bailout on the Senate side was Richard Polanco (LA) and, of course, the man who visited deregulation upon us, San Diego’s Steve Peace. There were also a few lawmakers so presumptively confident of their constituents that they thought they could get away with it, like LA’s Jackie Goldberg (D-Liberal), who recast herself as a "pro-business Democrat" in a speech in favor of the bailout. We know many of you will join us next year as we make sure the voters are aware of the betrayals of those who seek to represent us.

Davis refuses to admit defeat. The Senate’s rejection of Gray Davis’s bailout plan left him angry. In a statement reminiscent of his 1999 assertions that the Legislative branch of government had to follow his "vision," Davis said that "the Senate has not gotten the job done" and promised to convene another "special session" in October to once again try to pass the bailout. Senators were furious. To a bi-partisan ovation from the Senate, Burton responded by noting that the Governor didn’t have the votes in the Senate to pass the bailout because "It would have been a rip-off of residential people to help big business and bail out a corporation…. We didn’t take [the Edison bill] up because we didn’t want to embarrass the governor." As for Davis’s threat of another special session in October, Burton said he’d be on jury duty.

Give it up, Governor, and move on. As we see it, calling another special session on energy — the third this year — would be a huge mistake for California and for Davis himself. A special session would throw a massive spotlight on the bailout — unlike the end of session chaos in which Edison clearly hoped the bill would slip by. Would Assembly Democrats who walked the plank for Edison and Davis, only to see the bailout die, be foolish enough to make the same mistake again? Moreover, the Governor’s preoccupation with the bailout distracted lawmakers from actions to address the state’s energy crisis, which rescuing Edison would have no impact upon. Meanwhile, the long-term energy contracts signed by the Governor’s conflict-of-interest- ridden negotiators lock the state into massively higher prices for the next fifteen years. Both California and Davis would be better off with him focused on getting the present prices reduced and dealing with other aspects of the electricity deregulation debacle.

Edison Spreads Last Minute Lies. Seasoned Sacramento observers know that in the last hours of the session, lobbyists will spare no device to push through their pet projects. Thus, it came as no surprise that an Edison lobbyist would be on the phone to Senators, telling them that if Edison didn’t get a bailout, Wall Street would be displeased and taxpayers would end up eating the $12 billion costs of electricity purchased by the government after Edison and the other utilities ceased buying electricity last January. Luckily, State Treasurer Phil Angelides quickly dispatched a staff person to reassure lawmakers that Edison’s assertions were incorrect.

And– get this — when it became clear that Edison had lost the battle late Friday night, the company that set bankruptcy deadlines of Mid December 2000 April 1 (2001), May 1, July 15, August 15 and finally September 15, announced that Edison and its lenders would wait until mid-October to get the rescue the Governor promised! Having repeatedly warned of its impending death, Edison’s credibility with lawmakers has evaporated.

A word about America’s great loss. Those of us at FTCR working against the bailout were unable to pause for more than a few scattered moments last week to absorb the enormity of that villainous horror. We felt we could not rest, because the other side was not resting. Our staff finally returned to their friends and loved ones Saturday afternoon. We are thankful for that, and for the freedom and liberty of our nation.

Judgment Day
413 Days Until November 5, 2002