Read FTCR’s letter to Governor Davis

Consumer advocates called on Governor Davis to apply consumer-oriented criteria as he establishes and implements the California Public Power Authority, which becomes operative today. In a letter to the governor, the Foundation for Taxpayer and Consumer Rights (FTCR), urged the governor to ensure that the new power system operates in the interest of ratepayers rather than shareholders, as has been the case under deregulation.

On November 28, 2000, FTCR called on Governor Davis and the Legislature to develop a California Public Power Authority that would fulfill California’s energy needs with a not-for-profit, publicly accountable system and supplant the profit-driven deregulation scheme that has devastated California.

According to FTCR, the primary lesson of California’s deregulation fiasco is that “electricity service is too vital to public health and safety and the state’s economy to be left in a volatile, unregulated market. Economic stability and consumer needs necessitate a reliable, affordable, accountable and safe energy system. California, through the implementation of the Power Authority, can turn the nation’s most derided energy system into the standard bearer of consumer-oriented and environmentally-sound energy policy.”

FTCR urged the Governor to ensure that the following essential elements be included in the Power Authority’s formation:

• Public Process: All aspects of the Authority must be subject to public scrutiny.
• Affordable Power: If private power companies’ electricity prices are determined to be unjust the Authority must be prepared to exercise its powers — including that of eminent domain and the right to sue — to ensure that rates are returned to a reasonable, low-cost level.
• Development of publicly-owned generation facilities: To reduce California’s dependence on unregulated independent power companies, the Authority must set out to own and operate power plants.
• Public Interest and Consumer Oriented Board: As the governing body of the Public Power Authority, the members must be, first and foremost, advocates for the consumer-owners of the new power system.
• Environmentally Sound: The Authority must be innovative and persistent in developing a diversified and renewable portfolio of energy sources that improve system reliability and environmental quality. The Authority must also use its resources to actively promote energy efficiency and conservation.
• Permanent Protection: This agency should not be constructed as a short-term fix for deregulation; its success depends upon the governor’s resolve to allow the public power system to replace the deregulation system.

“Californians want an energy system that is affordable and reliable. The unregulated, private system has failed, so a responsive public power system must become the bedrock of California’s energy future,” the letter concludes.

August 13, 2001

The Honorable Gray Davis

Governor, State of California

State Capitol

Sacramento, CA 95814

Re: Essential Criteria for Ensuring Consumer -Oriented Public Power

Dear Governor Davis:

Through the dark clouds of the deregulation debacle, a new energy system begins to shed its light on California today. As the state formally enters the public power era, the Foundation for Taxpayer and Consumer Rights (FTCR), urges you to aggressively pursue the development of an active and open California Consumer Power and Conservation Authority.

It is our belief that the primary lesson of California’s experiment with electricity deregulation is this: electricity service is too vital to public health and safety and the state’s economy to be left in a volatile, unregulated market. Economic stability and consumer needs necessitate a reliable, affordable, accountable and safe energy system. California, through the implementation of the Power Authority, can turn the nation’s most derided energy system into the standard bearer of consumer-oriented and environmentally-sound energy policy.

California’s energy future must be constructed to operate in the interest of ratepayers rather than shareholders, as has been the case under deregulation. The Power Authority will be most effective in fulfilling the state’s energy needs if you construct a not-for-profit, publicly-accountable system that will supplant the profit-driven deregulation scheme that has devastated California.

With that as your framework, we offer the following criteria for developing a public power system that will make California a leader in innovative, sustainable and consumer-oriented energy policies.

• Public Process: The interim state power agency, the DWR, has been embroiled in controversy of late, and that is a direct result of the shroud of secrecy that has enveloped the agency since it took over power procurement earlier this year. To restore public faith in the ability of government to organize and operate a trustworthy power agency, the Authority must be characterized by a distinctly more open environment than that of its predecessor, the DWR. The public must be permitted and encouraged to take an active role in Authority operations and rulings. Citizens must be allowed a direct voice — through public hearings, open board meetings and intervention — in Authority decisions, and the Authority must be responsive to citizen concerns. Its operations must be subject to public scrutiny.
• Affordable Power: A cornerstone of public power is the goal of providing affordable and efficient electricity to consumers at the lowest cost consistent with reliability. It is essential that the Authority scrutinize the operations of power companies functioning within California to determine whether or not rates are just and reasonable. If rates are determined to be unjust the Authority must act on behalf of the public in exercising its powers — including that of eminent domain and the right to sue — to ensure that rates are returned to a reasonable, low-cost level.
• Development of publicly-owned generation facilities: To reduce California’s dependence on unregulated independent power companies, the Authority must set out to own and operate power plants. Publicly-owned generation — the backbone of agencies like the New York Power Authority and the Los Angeles Department of Water and Power — is essential to protect ratepayers against market inefficiencies and distortions.
• Public Interest and Consumer Oriented Board: As the governing body of the Public Power Authority, the governing board members must be, first and foremost, advocates for the consumer-owners of the new power system, with a demonstrated commitment to serving the Public Interest, and free of the conflicts of interest that have plagued the DWR.
• Environmentally Sound: One of the lessons from California’s recent energy woes is that the state is far too dependent on natural gas powered electricity. The Authority must be innovative and persistent in developing a diversified portfolio of renewable energy sources that improve system reliability and environmental quality. Sound energy policy depends on responsible energy consumption; the Authority must also use its resources to actively promote energy efficiency and conservation.
• Permanent Consumer Protection: The Power Authority should be structured with the expectation that it will become a lasting fixture in California’s energy operations. This agency should not be constructed as a short-term fix for deregulation; its success depends upon your resolve to allow the public power system replace the deregulation system.

The Foundation for Taxpayer and Consumer Rights urges that these fundamental criteria be applied to the formation of the California Consumer Power and Conservation Authority. Californians want an energy system that is affordable and reliable. The unregulated, private system has failed, so a responsive public power system must become the bedrock of California’s energy future.

Thank you for considering our views on this matter.

Sincerely,

Douglas Heller

Emmy Rhine