Memo Reveals Businesses Angered by Leaders’ Actions

San Francisco, CA. — The Foundation for Taxpayer and Consumer Rights (FTCR), one of California’s leading consumer organizations, today sent a letter calling for the resignation of California Chamber of Commerce President Allan Zaremberg and California Business Roundtable President William Hauck for “betraying the interests of California’s businesses and consumers.” FTCR sent the letter in response to recent statements by Mr. Zaremberg championing electricity rate increases for businesses, and the Business Roundtable’s funding of advertising defending politicians’ handling of the crisis.Click here to read the FTCR letter.

“Time and again on the energy issue, Mr. Zaremberg and Mr. Hauck have sold California’s businesses down the river,” said Doug Heller, consumer advocate with FTCR. “Because of their political and corporate ties, they have made their organizations irrelevant to the mainstream business community that is struggling through the deregulation disaster.”

Harold Mann, president of Mann Consulting, a San Francisco computer consulting firm employing 22 people, said that businesses of all types and sizes are being crushed by rate increases and rolling blackouts. Mann estimates the crisis has already cost his business several thousand dollars in unbudgeted expenses, and he predicts spending thousands more before the summer is over.

“We’re a small business and we support the technology needs of more than 150 small and medium-sized businesses. We feel the impact and we hear it everyday from our clients — big and small — who are suffering through this crisis,” Mann said. “California’s businesses have enough to worry about with a slowing economy. To have to worry about blackouts and rate increases on top of that is an additional headache we just don’t have the time or resources for. It is a complicated issue, but one thing we know for sure is that the business groups and politicians are failing us.”

FTCR has hired Joel Marks to organize business owners like Mann in support of ratepayer-based solutions to the utility crisis and to fill the leadership void left by the state business organizations. Marks is the founder and former executive director of the American Small Business Alliance, a national business association based in Washington, D.C.

“The statewide business lobbies have chosen to defend the utilities and energy producers — and the gouging of businesses and consumers — while abandoning the very businesses they were hired to represent,” said Marks. “California’s businesses deserve honest, independent leadership that these two men simply can’t and won’t provide.”

In calling for the resignations of the Chamber and Business Roundtable presidents, FTCR pointed to the following recent actions:

• In a March 27th memo to Chamber members, Mr. Zaremberg told businesses that “In order for the state or the utilities to continue to buy power for California, ratepayers must begin to cover wholesale costs.” In other words: raise rates. The memo concluded that the “‘silver linings’ in these dark clouds’ is that price increases will help reduce demand this summer.” In defending the hikes, Mr. Zaremberg claimed that “both residential and commercial customers have enjoyed stable retail rates for the last nine months.”
• A March 30th memo from Mr. Zaremberg to members of the Chamber indicates the anger and betrayal felt by many small business members about the March 27th communiqué. In response to the apparent e-mail upheaval (“[m]any of you responded to my e-mail earlier this week”), Mr. Zaremberg wrote, “I can assure you that the Chamber’will be working on behalf of businesses of all sizes,” (emphasis added).
• Mr. Hauck is a key supporter of the “Energy for California” radio campaign and website, which defends politicians and the status quo. Mr. Hauck’s Business Roundtable has not retracted its support of the ads even in the wake of the state’s single largest rate increase on businesses.
• Executives of each utility sit on the California Chamber Executive Board and Edison, PG&E and SDG&E‘s parent Sempra are members of the Business Roundtable. Small employers are frustrated by the state Chamber’s quiescent response to the disastrous deregulation fiasco and clear acquiescence to the organization’s largest and most powerful special interests.
• On December 26, 2000, Mr. Zaremberg and Mr. Hauck said, in a joint news release, that businesses should start paying higher electricity rates. Concerned about “threats from the financial community and Wall Street,” the groups called for “swift action by the CPUC to allow retail rates to at least moderately reflect wholesale rates.”
• In 1998, when it appeared deregulation was headed for problems, both organizations opposed the ratepayer protections embodied in Proposition 9, which was defeated with a $40 million campaign by the utilities. Mr. Zaremberg was the utilities’ chief spokesman in that battle against consumer and business interests.

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FTCR Letter to Business Groups

April 12, 2001

Allan Zaremberg, President

California Chamber of Commerce

1215 K Street, Suite 1400

Sacramento, CA 95814

William Hauck, President

California Business Roundtable

1215 K Street, Suite 1570

Sacramento, California 95814

Re: Your resignations are warranted

Dear Mr. Zaremberg and Mr. Hauck:

Your most recent actions — championing electricity rate increases for businesses and running ads that defend politicians’ handling of the energy crisis — are just the latest in a long history of betrayals to the business community on this issue. They are a clear sign that it is time for you to resign from your positions of leadership.

California’s businesses need strong, independent leaders to represent their interests during this grave energy crisis. Skyrocketing rates and real and threatened blackouts are having a crippling impact on businesses’ bottom line, seriously threatening their productivity and stability and jeopardizing California’s economic future. Yet both of you vigorously defend the failed public policies, inept leadership and profiteering cartel that put California businesses in this disastrous predicament.

Your policy positions would have California’s businesses pay more and bear the brunt of responsibility for the deregulation debacle that has been foisted upon them and that you have helped create. For too long, the old-line business lobby has defended utilities and energy producers at the expense of every other business in this state and it is time for a new direction.

Your resignations are warranted because:

• In a March 27th memo to businesses, Mr. Zaremberg, you supported electricity rate hikes. You opened your memo by stating “the rate increase is probably necessary” and later added that “in order for the state or the utilities to continue to buy power for California, ratepayers must begin to cover wholesale costs.” You concluded that the “‘silver linings’ in these dark clouds’ is that price increases will help reduce demand this summer.” California already ranks 2nd nationwide in terms of per capita energy efficiency, yet your approach is to punish businesses. As you must know, the recent rate hikes — the largest ever imposed on California businesses — offer no protection for businesses, whether or not they conserve.
• A March 30th memo from you, Mr. Zaremberg, to members of the Chamber indicates the anger and betrayal felt by many small business members about the March 27th communiqué (for, among other things, suggesting that “both residential and commercial customers have enjoyed stable retail rates the last nine months.”). In response to the apparent e-mail upheaval (“[m]any of you responded to my e-mail earlier this week”), you wrote, “I can assure you that the Chamber’will be working on behalf of businesses of all sizes,” (emphasis added).
• Mr. Hauck, you are a key supporter of the “Energy for California” radio campaign and website, which defends politicians who have raised rates and are punishing businesses for nighttime use of power. The ad tells listeners what “Governor Davis, the Legislature, business and community leaders are working to do.” It includes, the ad continues, “working with businesses to voluntarily implement conservation measures.” Is the Governor’s plan to fine businesses $1,000 if they don’t cut evening energy use by 50% your idea of “voluntary” measures?
• Executives of each utility sit on the California Chamber Executive Board and Edison, PG&E and SDG&E‘s parent Sempra are members of the Business Roundtable. These large interests are guiding your public policy positions. Surely, these are not your only members, a fact that was doubtless noted by the many business owners who protested the aforementioned Chamber memo regarding the Governor’s rate increases.
• On December 26, 2000, Mr. Zaremberg and Mr. Hauck, you said, in a joint news release, that businesses should start paying higher electricity rates. (When have your organizations ever advocated on behalf of higher costs for businesses?) Concerned about “threats from the financial community and Wall Street,” you called for “swift action by the CPUC to allow retail rates to at least moderately reflect wholesale rates.”
• In 1998, when it appeared deregulation was headed for problems, both of your organizations opposed the ratepayer protections embodied in Proposition 9, which was defeated with a $40 million campaign by the utilities. Mr. Zaremberg, you were the utilities’ chief spokesman in that battle against consumer and business interests. Your work to defeat these protections has enabled out-of-state companies like Reliant Energy and Duke Energy to gouge Californians (these companies saw their profits last year increase 600% and 153%, respectively).
• n 1996, the old-line business lobby supported, with unanimity, the electricity deregulation bill. At the time, you promised California’s businesses and ratepayers rate reductions of 20% by 2002 and gleefully predicted that competition in the electricity industry would benefit all Californians. To date, neither of you have accepted any personal responsibility for these broken promises.

It is difficult to imagine the benefits of the recently authorized 40% electricity rate increases to your member businesses or the multi-billion dollar consumer and business bailout of Edison announced by Governor Davis. Nonetheless, you have placed yourselves in the inexplicable and precarious position of backing such a hike. While your organizations purport to represent thousands of businesses throughout the state, your decisions to support the Davis administration and with it the single largest rate increase on California businesses indicates a skewed deference to the state’s three utilities at the great expense of all other businesses.

By siding with the Governor and the utilities in support of rate hikes — and with clear conflicts-of-interest for both of you on the issue — you render your respective organizations irrelevant to mainstream businesses that depend upon your advocacy. Again, in order to restore credibility to the advocacy efforts of the business community, we believe it is best if you both resign.

We will be communicating with your member businesses and chapters to discuss ratepayer-oriented solutions to the energy crisis, as well as your leadership on the issue.

Sincerely,

Douglas Heller Joel Marks