Group Plans Initiative to Limit Profit of California Electric Suppliers

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San Jose Mercury News

 An advocacy group unveiled plans Tuesday for a statewide initiative that would limit how much profit electricity suppliers can make, require them to refund to consumers part of what they earned this year and essentially re-regulate the energy markets.

The measure by long-time consumer advocate Harvey Rosenfield and his Foundation for Taxpayer and Consumer Rights also would ban utilities from billing consumers billions of dollars for last summer’s power costs, while bolstering the government’s ability to seize power plants and high-voltage lines from utilities and power suppliers through eminent domain.

Blaming the 1996 state law that loosened government control over the sale of electricity, Rosenfield said runaway electricity prices could plunge California into a recession or worse if state officials allow what he called “this foolish and stupid mistake to continue….We want to take this system back out of the hands of greedy private interests.”

In a separate action Tuesday, power suppliers were served with a class action suit that also seeks refunds for all California electricity users. It accused the firms of having “unlawfully manipulated the California wholesale electricity market” to boost prices.

Although the suit filed in San Diego County Superior Court doesn’t specify the amount of refunds sought, it mentions estimates that power firms overcharged Californians by $ 4 billion last summer.

Tuesday’s double-barreled assault on suppliers prompted a decidedly cool response from Richard Wheatley, a spokesman for Houston-based Reliant Energy.

He said the suit lacks merit and noted that several studies by energy officials have found no proof that power suppliers did anything illegal. Moreover, he characterized the proposed initiative as a misguided effort that could make it harder for California to convince companies to build more in-state generating plants.

“This would serve to be a disincentive to do business in the state,” Wheatley said.

The consumer group presented only sketchy details of the proposal, but said they planned to study the issue and provide a more elaborate description when the initiative is filed.

They said they would immediately file papers with California Secretary of State to set up an initiative campaign committee and would probably begin seeking signatures in several months to qualify it for the 2002 election ballot.

It couldn’t be voted on sooner because there are no statewide elections before then, they said. Besides, they said, they hoped that announcing the measure now would prompt the state legislature and Gov. Gray Davis to pass laws to achieve the same results. If that happens, they said, they promised to back off the initiative.

Davis is expected to announce his plans for easing the state’s electricity troubles later this week. But in response to Rosenfield’s proposal, Davis spokesman Steve Maviglio said only that “Gov. Davis inherited this problem and is working hard with all parties to fashion an appropriate solution.”

Senate President pro Tem John Burton, D-San Francisco, reacted favorably to the initiative idea, noting that the threat of a ballot measure might prompt politicians and power company officials to work harder to find a legislative solution.

But Senate Republican Leader Jim Brulte, one of the co-authors of the bill that de-regulated the energy industry, said imposing new government restrictions on electricity sales is no answer. “The way you move to the lowest possible price of power for consumers is by having a competitive market place,” he said.

No matter what the legislature and Davis pass, Rosenfield vowed to go ahead with the initiative unless lawmakers stop taking contributions from power or utility firms. They also said they won’t tolerate any deal requiring consumers to compensate utility firms for the unanticipated high cost of wholesale power last summer.

That didn’t sit well with Pacific Gas & Electric Co., which wants to charge its consumers $ 3.4 billion for its summer expenses. Even so, PG&E spokesman Ron Low said Rosenfield has some good ideas, including setting limits on how much profit power suppliers can earn. “The wholesale market is clearly broken and all parties need to work together and act responsibly so that we can fix it,” Low said.

Consumer Watchdog
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