Consumer Advocates to Legislature: Slow Down, Head Off Hidden Utility Bailout

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Sacramento — With billions of dollars worth of ratepayer and taxpayer subsidies for the utilities potentially hidden in the terms of the “energy deal” being worked out behind closed doors, consumer advocates sent a letter to legislative leaders today outlining requirements for the energy deal to assure public support and avert a battle at the ballot box.

In a letter to Senate Leader John Burton and Assembly Speaker Robert Hertzberg, the Foundation for Taxpayer and Consumer Rights (FTCR) urged the Legislative leaders to move forward cautiously, allowing the public to review and scrutinize any proposed deal that has been negotiated in private meetings between state and federal officials, utilities and independent generators. The key points of the letter:

  • No ratepayer bailout of the utilities through hidden profit spreads in the long term contracts.

  • Require utilities to sell their in-house electricity to core residential and small business customers.

  • Utilities must pay taxpayers for acting as bank in purchasing electricity.

  • Professional experts, not elected officials, should handle negotiations.

  • Public hearings before contracts approved by elected officials.

  • Re-regulation necessary to protect public.

  • consumer representation, is necessary to prevent recurrence of problems in future.

Group Warns Against Hasty Action

Referring to reports that the utilities were pushing the Assembly to approve a spot bailout bill today, the advocates urged lawmakers to avoid the hasty action that resulted in AB 1890 in 1996:

“The lesson from 1996 is that speed kills. It’s not just the ratepayers and taxpayers who are at risk. Hasty action approving legislation not publicly reviewed or understood through extensive hearings denies elected representatives the ability to exercise their constitutional responsibilities to their constituents. Deregulation was the mistaken work of your predecessors and their legislative leaders. But current members will be held accountable for the failure of this Legislature to resolve the problems that deregulation has caused.”

“If structured properly, lawmakers can turn the deregulation disaster into a sound, publicly-oriented energy policy,” said consumer advocate Doug Heller. “If the terms of the deal are not reconfigured, however, and it remains a bailout, veiled or not, lawmakers will stoke the ire of the public. If the deal rescues the utilities, repays the pirates and leaves the public holding the bag, the voters will undo the deal through a ballot initiative or possibly even a referendum.”


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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