Bailout Watch #82 – Oct 04, 2001

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

Bailout Watch #82 – Oct 04, 2001


Residential and small business customers to pay massive Edison bailout. On Tuesday, the Cal. PUC, controlled by Gov. Davis, announced a secret agreement with SoCal Edison that will force consumers to bail out Edison to the tune of $3 billion+ over the next four years. Here’s what happened: Months ago, Edison sued the state to force the company’s customers to pay off the multibillion-dollar debt the it racked up as a result of its own deregulation scheme. The PUC had a solid legal defense against the rate hikes (a similar PG&E case stalled in court earlier this year). But the PUC abandoned its position of strength Tuesday and "settled" the case with Edison, allowing the utility to charge its customers excessive rates to pay off the company’s debts. Normally, when regulators are sued, their responsibility is to defend the public. Instead, PUC officials defied their oath (and state law) in the name of handing Edison a bailout.

This dirty backroom deal represents a deliberate strategy to undermine the public process.
Californians called and wrote letters to their elected representatives in Sacramento. They took to the halls of the state capitol in an underdog effort to beat the utility lobbyists with citizen action. The overwhelming message: Californians do not want to bail out Edison; a Field Institute poll found that 68% of registered voters opposed the bailout. The result: in a victory for consumers, the Senate rejected the egregious Edison bailout scheme. The people spoke, and the Senators did their job; that’s democracy working the way it should. In contrast, by concocting this bailout scheme for Edison, an unholy alliance of Edison’s lawyers and unelected PUC officials have committed Southern Californians to pay an estimated $750/ratepayer, or $3 billion over the next four years. Note: despite weak promises that this deal doesn’t result in rate hikes, there is no such thing as free money, and consumers will pay far more in electricity rates than they should for years to come. And, not surprisingly, the deal allows the PUC to raise rates even higher in 2003, after the next election.

Hail Caesar! The PUC’s unprecedented action reflects an imperiousness and disregard for lawful authority that has become a characteristic of Governor Gray Davis. Davis’s secret negotiation of $50 billion in long term energy contracts last spring — already far more expensive than current prices in the so-called "market" — has locked in high electric rates for the next twenty years. Many of the state contracts were negotiated by people who had investments in, or had actually worked for, the energy companies, as consumer groups and Secretary of State Bill Jones have pointed out in calls for an investigation by state agencies. Davis’s inability to distinguish boundaries of proper authority in a democracy dates back to his statement in 1999 that "the Legislature exists to implement my vision." This disdain for democracy has permeated his Administration and is reflected in his PUC’s attempt to ignore state laws.

It’s not over. All of us who worked so hard to protect the ratepayers against the deregulation debacle, the phony energy crisis and the Edison bailout for the last fourteen months have reason to be dismayed. But the battle is not over.

-Legal attack- FTCR plans to intervene to challenge the settlement and the PUC violation of the state Constitution and laws. We believe the agreement is illegal and will be rejected by the federal courts, on appeal if necessary.

-Ballot attack- FTCR has asked several nationally-recognized lawyers and law professors to assist us in determining how we can undo a federal court decision by ballot measure.

We will need resources to take on the utility and government lawyers. FTCR is no stranger to litigation. Our successful defense of insurance reform, Prop 103 , yielded $1.5 billion in consumer refunds and $23 billion in insurance savings. But it takes $ to fight in court. Please help FTCR stop this backroom Bailout deal by making a contribution at

Thank you for your support.

Judgment Day
396 Days Until November 5, 2002

Consumer Watchdog
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