NPR WEEKEND ALL THINGS CONSIDERED
LISA SIMEONE, host:
In California, they’re hoping to make it through the weekend without more rolling blackouts. Energy reserves are again at a critical low. But there is a new proposal that California Governor Gray Davis says could resolve the state’s worst ever energy crisis. Critics say it will be a hard sell to consumers. From San Francisco, NPR’s Elaine Korry reports.
ELAINE KORRY reporting:
Governor Davis is backing a proposal written by Assembly Speaker Robert Hertzberg that would give Californians an ownership interest similar to stock options in its two largest utilities, Pacific Gas and Electric and Southern California Edison. Emerging from a closed-door meeting with lawmakers, the governor told reporters the bond plan would resolve the crisis while sparing rate payers from runaway electric bills.
Governor GRAY DAVIS (California): Obviously, nobody can guarantee the future. I can’t guarantee you what the price of milk is. I can’t guarantee you what the price of a home is, but it is our expectation, our plan and our intent to craft a solution that will not require a rate increase and that will allow rates to continue within the existing framework.
KORRY: Under the plan, California would negotiate long-term electricity contracts with private power companies at low rates. The state would also issue revenue bonds to recover the combined $ 12 billion the utilities lost buying power at exorbitant wholesale rates. The bonds would be paid off by rate payers. Earlier this month, the state Public Utilities Commission approved a temporary 9 percent rate hike for residential customers. Under the bond plan, that increase, scheduled to expire after 90 days, might remain in effect for 10 years. Then again, it might not. State Senator Debra Bowen.
State Senator DEBRA BOWEN: Much of this, as the governor has said many times, depends on how good a job we do negotiating contracts and how we balance the need for short-term stability against long-term pricing and long-term stability. And I’m very comfortable that we have two people who are very well qualified to do a terrific job on behalf of this state.
KORRY: Tough negotiations over price could begin as early as Monday. The governor announced he’s received more than three dozen bids from suppliers. Financial details of the proposal are far from hammered out. Governor Davis is maintaining it’s not a rate payer bailout, but consumer groups disagree. Harvey Rosenfield is a long-time activist with the Foundation for Taxpayer and Consumer Rights. He sees Davis leaving the door open for hefty rate increases, and according to Rosenfield, promising rate payers an ownership stake in the utilities in return for higher bills doesn’t count for much.
Mr. HARVEY ROSENFIELD (Foundation for Taxpayer and Consumer Rights): The amount of bailout that they’re asking for is more than all the value of their stock combined right now.
KORRY: Governor Davis argues that with the energy crisis resolved, the utilities’ stock would rise. Presumably, the state could sell its shares for a profit, which would go back to rate payers. But Rosenfield wants none of it.
Mr. ROSENFIELD: Before they come to the rate payers or taxpayers for even a penny of bailout, they ought to sell the billions of dollars of non-essential assets they’ve purchased with rate payer money through the deregulation bonanza over the last few years. Sell that off. Get rid of their cash, and then we’ll talk.
KORRY: But the parent companies of the utilities don’t want to bail them out either. They’ve already tried to shield their assets from being sold to rescue the power companies. Now they’re pressing for far more from consumers than even the bond plan would allow. Both utilities, PG&E and Edison, went to federal court last week seeking large rate hikes immediately to recoup their electricity losses directly from customers. Hearings in those lawsuits could begin any day.
