Why Is The Assembly Bailout So Bad?

Published on

SB 78xx:

  • Forces virtually all businesses, including small businesses & family farms (approximately 180,000 Southern California businesses), to pay a $4.1 billion bailout tax ($2.9 billion for bailout, $1.2 billion in bond interest). These costs will be passed on to consumers. Many businesses have already added “energy surcharges.”
  • Allows Southern California Edison to reap an extra benefit worth more than $1 billion (See attached estimate from PUC‘s Office of Ratepayer Advocate)
  • Gives ratepayers nothing in exchange for bailout (In Sen. Pres. John Burton’s terminology, we give $ but get no “Hot Dog.”) The bailout bill removes the exchange of transmission lines from Edison for bailout money. Instead, ratepayers get the “option to buy” the lines at $2.4 billion (twice the book value) which can only be exercised by a future vote of the legislature. (In effect, submitting the issue to Edison‘s lobbyists at a future date). In the unlikely event that such a purchase happens, any profit from it will not be used to reduce debt or repay the ratepayers.
  • Allows big businesses to escape the long-term DWR contracts through a Direct Access program that would leave residential and small business consumers with the burden of the long and vastly over-priced DWR contracts negotiated by the Governor.

  • Locks the state of California into a high-priced 10-year contract for electricity with Edison‘s subsidiary (the Sunrise plant).
  • Guarantees Edison a higher-than-appropriate rate of return (11.6% profit) that cannot be lowered by the PUC for 5 years. Office of Ratepayer Advocate (ORA) conservatively estimates this will provide at least $300 million in excess profits to SoCal Edison (see attachment).
  • Says that if FERC orders refunds, Edison receives up to $500 million that should be designated to ratepayers. (ORA estimates $225 million will go to Edison as a result of limited FERC refunds.) In effect, if such refunds are made, Edison will come out of the bailout with extra profits beyond the payback of its stated debts.
  • The ORA says the bailout further subsidizes Edison‘s nuclear plants through accelerated depreciation of San Onofre & Palo Verde plants (see attachment).

CONTACT: Doug Heller/Carmen Balber 310-403-0284

Consumer Watchdog
Consumer Watchdoghttps://consumerwatchdog.org
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

Latest Videos

Latest Releases

In The News

Latest Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Releases