Nightly Business Report

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(Partial Transcript)

Community Television Foundation of South Florida

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Well, what a difference a year makes. In California a year ago, electricity prices were soaring, supplies were dropping and the state was hit with rolling blackouts. Things are quite different now.

But as Pat Anson reports, consumers are still paying the price.

PAT ANSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: A year ago, Californians were being urged to conserve electricity by turning off their Christmas lights.

UNIDENTIFIED MALE: Ho ho ho! Merry Christmas!

ANSON: This year the lights are back on again, but the Grinch that darkened the holidays last year still lingers, in the form of long-term power contracts. The contracts are forcing the state to buy high priced electricity it doesn’t need and resell it at a loss.

DOUG HELLER, FOUNDATION FOR TAXPAYER & CONSUMER RIGHTS: This is a comedy of errors, and I don’t think Laurel and Hardy could have done better. Because at every point we have fallen on our face. We have stepped on the rake and the only difference between this and watching some old comedy is that it’s going to cost Californians $50 billion to $60 billion in higher electricity rates.

ANSON: At the height of the power crisis, the state signed over 50 long- term contracts with energy suppliers, paying an average price of $75 a megawatt hour. The state is now reselling much of that power for about $16 a megawatt. Conservation, increased supply and the elimination of a power trading system that many feel was being manipulated have turned the power crisis into a power glut.

DOUG CHRISTOPHER, ANALYST, CROWELL, WEEDON & COMPANY: I would agree there was some element of manipulation in the trading element of the power business. We’ve never had a power shortage in California. If anything I think that we’ll see that we have over the next three to five years more than enough power.

ANSON: Next spring when electricity demand falls in California, the state estimates nearly 60 percent of its power purchases will have to be resold at a loss. The surpluses will continue for the next several years, reaching their peak in 2004. The state is now trying to renegotiate the power contracts, but so far no supplier has agreed to lower its prices.

CHRISTOPHER: You’ve got power companies that made billions of dollars off California’s pain and they did it by convincing our leadership in the state that if we didn’t pay the money, we were in a lot of trouble. It’s like a Mafia relationship.

ANSON: Holiday lighting in California consumes an enormous amount of electricity, about the same amount of energy produced by a nuclear power plant. The irony for Californians is that whether they use that power or not, they’ll still wind up paying for it.


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