Utility Consumers Groups Enjoy New Power amidst California’s Power Crisis

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North County Times

 SACRAMENTO, Calif.–Groups that represent utility consumers, after spending years in the obscurity of regulatory hearings, are suddenly enjoying access and clout as lawmakers wrestle with the power crisis in California.

Analysts say three groups in particular have shaped legislation in recent weeks and have come to wield considerable influence: the Utility Consumers Action Network, based in San Diego; The Utility Reform Network, based in San Francisco; and the Foundation for Taxpayers and Consumers Rights, based in Santa Monica. The San Diego and San Francisco groups are best known as UCAN and TURN, respectively.

The meltdown of California’s 1996 experiment with partial electricity deregulation has by all accounts created a climate of fear and confusion in the state’s capital.

“The last time nobody was listening; this time everybody is watching,” said Harvey Rosenfield, a prominent advocate at the Foundation for Taxpayers and Consumers Rights.

Soaring wholesale prices have boosted utility bills for most consumers. The near-insolvency of two of the state’s three big utilities threatens to force further rate increases.

Gov. Gray Davis and the state Legislature face a daunting task of restoring solvency to the utilities —- the companies that distribute power —- and assuaging the demands of power generators who threaten blackouts if they aren’t paid. At the same time they must limit the economic and political fallout that would certainly follow a big hike in bills to consumers.

Lawmakers have taken to asking whether a proposed piece of legislation is “Harvey-proof,” referring to Rosenfield’s plan to launch a ballot initiative next year to repeal deregulation.

Rosenfield was the author of Proposition 9, which would have eliminated billions in subsidies for nuclear plants owned by utilities if it had been approved in 1998.

More successful was Proposition 103, a 1988 voter initiative sponsored by Rosenfield that lowered auto insurance rates for some people.

“The consumer groups really have more clout than ever before with lawmakers, because lawmakers are very nervous about voting for something that is or is perceived to be bailout (for utilities),” said Evan Goldberg, chief of staff for state Sen. Debra Bowen, D-Marina Del Rey, chairwoman of the Senate’s energy committee.

One reason people seem to be listening to the consumer advocates is that they were right: In October 1999, UCAN, the San Diego-based group, issued a report that predicted electricity bills would double in San Diego County because of soaring wholesale power and natural-gas costs. Industry experts disputed the analysis.

The UCAN prediction turned out to be conservative, and bills tripled for many in the county last summer. An emergency rate freeze was imposed after a “ratepayer’s revolt,” which was started by UCAN, was picked up by lawmakers from San Diego County.

All three consumer groups had resisted the state’s restructuring plan as far back as 1995, when regulators first proposed the idea.

In an echo of the current debate, the groups stridently objected to the issuance of $ 6 billion in bonds and billions more in rate hikes approved to compensate utilities for unprofitable investments.

“I think we have more credibility than we have ever had before,” said Nettie Hoge, director of TURN, the San Francisco group. “Everybody is casting about for solutions, and our predictions in the past have proved to be prescient.”

Last week the influential leader of the state Senate, John Burton, D-San Francisco, stood at a podium to announce his plan to swap billions of dollars for the web of high voltage power lines owned by the state’s cash-strapped utilities.

Burton was flanked by fellow lawmakers who supported the measure, but he deferred technical questions to his “experts” offstage —- Michael Shames, executive director of UCAN, and Mike Florio, senior attorney for TURN.

It wasn’t the first time they had been directly involved in legislation.

A caucus of Latino lawmakers last month introduced a TURN plan to protect residential electricity customers and to instead expose big businesses to any future rate hikes.

And a UCAN and TURN proposal to set electricity prices according to the cost of producing power was adopted by the state’s power manager in December, but was later shot down by federal regulators.

As the crisis has continued to heat up, the political capital of the consumer groups has steadily risen.

“I would like to think it’s the merits of our arguments and that we are really smart people,” Shames said.

“You have the makings of a political rebellion,” he said. “The politicians understand that the viewpoints of the consumer advocates are allied with those of their constituents.”

Some political veterans say term limits have flooded the state capital with inexperienced legislators who are easily swayed by media reports and pressure from consumer groups.

Others say endorsements by the groups provide insulation for lawmakers in the face of rate hikes that are becoming inevitable.

“There’s a lot of politicians running for political cover, particularly Democrats who have been strung out by Davis,” said respected Republican strategist Sal Russo.

Russo said Davis had a chance last summer to allow utilities to contract for cheap power, but he ignored calls from Republican legislators for a special legislative session. Now it’s too late.

“You can stir this pot any way you want, and in the end somebody’s got to pay,” Russo said. “I doubt taxpayers will pay much; it’s going to fall on the ratepayers.”

Consumer Watchdog
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