Consumer groups wary of new player

Published on

They fear it may saddle taxpayers with more debt

The San Francisco Chronicle

Consumer watchdog groups that have long bird-dogged the utilities on behalf of ratepayers are facing mounting challenges, and it’s not only because of the power crisis.

California’s most influential new energy player — the state government — buys power, signs contracts, and spends ratepayer money with a freedom from outside scrutiny that the utilities could only dream of.

Consumer groups now fear the shield could extend to the new state Power Authority being formed to fund power plant construction and other energy programs.

“The Power Authority has this huge mandate with no prioritization, no oversight, no accountability, and the ability to obligate ratepayers for $5 billion of revenue bonds,” said Nettie Hoge, executive director of The Utility Reform Network (TURN).

Ratepayer interest groups who support Gov. Gray Davis‘ public power initiatives in theory are nevertheless dismayed by the ground rules set down when the government jumped into the power buying business for the debt-ridden utilities in January. The state has now signed an estimated $43 billion in long-term electricity contracts.

Those early state power purchases were made immune from review by the state Public Utilities Commission, the agency that monitors the expenditures of Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric. If the utilities sign a bad contract, the PUC can refuse to make ratepayers cover the expense. And watchdog groups can comb through the PUC filings for unreasonable utility costs.

Not so for the state, which maintains it can withhold details of its transactions when it presents its revenue needs to the PUC.

“The secrecy around the Davis administration’s energy operations has been devastating to us because it leaves us without any checks and balances,” said Doug Heller of the Foundation for Taxpayer and Consumer Rights.

The concern is shared by a range of players that frequently cross swords in PUC cases — the utilities, which fear the state will gobble up a huge share of ratepayer revenues; and large industrial energy customers, who think the state contracts are too expensive.

“I used to think there was no bigger bully on the block than the utilities,” said Bill Booth, a spokesman for the California Large Energy Consumers Association. “But there is — it’s the state of California.”

To Davis, it makes no sense to have one state agency checking another, said his spokesman Steve Maviglio. “It’s duplicative,” he said.

“Unlike a utility, the state has no profit motive that has to be checked,” Maviglio said. “The state is just passing on the cost of the power — at cost.”

Consumer groups are still worried — especially in the wake of recent reports that state energy traders held stock in power companies.

“The more open a process is, the better it is for consumers,” said Michael Shames, executive director of the Utility Consumers’ Action Network in San Diego. “We’re seeing the opposite occurring.”

Consumer Watchdog
Consumer Watchdog
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