The Coming Showdown at the Ballot Box

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The basic laws of physics (the speed of light, the power of gravity) once thought immutable, may be changeable after all, scientists reported last week. But if there is one fundamental rule about Sacramento lawmaking that has not changed — at least in recent decades — it’s the power of the special interests. That’s why we at FTCR are in the final stages of preparing for the Mother of All Ballot Wars next year.

If the electricity deregulation debacle has taught us anything, it is that the majority of our elected leaders simply lack the ability to protect the public against the insatiable demands of the powerful lobbies — even if they wanted to. The unanimous ramrod of the dereg law in 1996 was only the beginning. First, we were taken to the cleaners by Edison, PG&E and San Diego Gas & Electric. Cost of the AB 1890 utility surcharge approved by lawmakers (many of whom are still around): $20 billion. Once the utilities were through, it became the energy companies’ turn. They bought our power plants from the utilities — with the permission of state officials — and jacked up the price of electricity ten fold. When the utilities stopped buying electricity, lawmakers opened the Treasury doors in January of this year (AB1X, SB7X) and the energy wholesalers walked out with $10 billion of taxpayer money in seven months. Immediate cost: a 45% average rate increase, $5 billion per year. Threatened with the extortion of manufactured shortages and rolling blackouts, the Davis administration chose not to seize back the power plants and sell the power at cost, but to surrender to the thieves, signing long-term energy contracts negotiated by individuals on the state payroll, some of whom were simultaneously invested in or doing business with the energy companies across the table from them. The price tag for that economic catastrophe: $50 billion or more. From 1996 on, it has been error after error, an endless cascade of policy disasters for which the beleaguered taxpayers and ratepayers of this state are continuously asked to pay. Plus interest.

And now, with three weeks left in the legislative session — a time when the public interest is in particular jeopardy through end-of-session shenanigans, midnight backroom deal-making — the special interests and the politicians are circling like vultures around our wallets once again. Governor “Give-Away” Gray Davis and Assembly Speaker “Bailout Bob” Hertzberg want to force ratepayers to bail Edison out of its economic troubles, to be followed by PG&E and SDG&E (cost to you: $15 billion). Other state officials want to lock-in the conflicts-of-interest in the long-term contracts by forcing the state Public Utilities Commission to surrender its constitutional responsibility to review any state-negotiated energy contracts, past or future. You don’t have to be a scientist to figure out the statistical likelihood that before they go home, lawmakers will put the screws to us once again.

But we are ready this time. I am finalizing a draft of the ballot measure that will undo the bailouts, the conflict-riddled deals, and the unjustified rate increases. It will restore a reliable and affordable energy system for the state, one that will maintain our treasured quality of life and create new jobs and improve the economy to boot. In the coming weeks, we’ll circulate it to our allies for their review.

Backing the initiative will be an unprecedented corps of volunteers of which you are a part: over thirty thousand of you subscribe to our “Bailout Watch” publication; twenty-five thousand have signed our on-line anti-bailout petition and many of those have joined with us to make our voices heard over the last six months; more than a thousand hard-core volunteers have joined our Blackout Brigades — they’ll be the core of our neighborhood-by-neighborhood campaign in every legislative district in California. You’ll also be joined by the Oaks, FTCR’s acclaimed citizen volunteer force, five years in the making. Most recently, the Oaks placed conflict of interest initiatives on five city ballots and successfully campaigned for their passage. And, as those of you who have received one of our test mailings know, we have begun a direct mail program that will ultimately reach millions more Californians with our ballot proposition and the individual accountability that lawmakers who vote against us will face. This constitutes a formidable and unprecedented, non-partisan strength that will be further enhanced by the support of California’s many constituencies — taxpayers, businesses, seniors, union workers, environmentalists.

Make no mistake: to preserve the license to steal that has won them hundreds of billions of our dollars, the utilities and the energy companies and their indentured servants will do whatever they can to stop us. The utilities alone had to spend $45 million to beat back our anti-bailout Proposition 9 in 1998, for which we spent $300,000, and that was before anyone knew how bad deregulation would be — and how much it would cost us. It is not inconceivable that the utility and energy industries will spend $100 to $200 million against us. But they’re afraid of an angry public, and so are the politicians: history has shown what happens when Californians take matters into their own hands on property taxes (Prop. 13) or insurance rates (Prop. 103). The special interests and the politicians know, from their own polling, what our internal research confirms: it will be nearly impossible to beat an angry and active public. There are not enough jobs at energy companies for all the elected officials who will lose office next year for voting for the special interests this year.

The Showdown isn’t inevitable: sensible lawmakers (or those merely concerned about self-preservation) will vote against any bailout that requires residential and small business ratepayers to pay one more penny to rescue the utilities’ executives and shareholders from their irresponsible and reckless conduct. They will also support SB 2X 18, Senate President John Burton’s bill to ensure that energy deals are open to public scrutiny and regulatory oversight, as the state constitution requires. But if worst comes to worst — we’re ready. Buckle your seat belts.

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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