When Arnold said that he would
not accept campaign contributions from businesses that have contracts
with the state, it was to ensure that contracts met the needs of the
public interest not the special interest. And when he promised to
"explore options for renegotiating or otherwise reducing the cost of
the $43 billion of overpriced electricity power purchase agreements
that Gray Davis signed," it was because these contracts were so out of
line with the public interest that something had to be done.
New information about how some power companies are using their state
power contracts and the deregulated energy system to once again gouge
California electricity ratepayers puts Arnold’s promises into a new
light. One of the firms involved in the newly identified scheme,
Sempra, recently donated $50,000 to Governor Schwarzenegger’s
California Recovery Team.
Two years after Enron and other power companies’ market manipulations
were exposed, there is now information that Sempra and Intergen (a
joint venture of Shell and Bechtel) are playing games with the
California energy system at a cost to consumers of millions of dollars
per month. The companies appear to be intentionally clogging a weak
transmission line at the California-Mexico border in order to be paid
not to produce power. The state’s electricity transmission operator,
known as the ISO, pays Sempra and Intergen for turning off the juice
that they are supposed to provide to the state as part of long-term
energy contracts signed during the energy crisis. Then the ISO buys the
needed power from another, less congested point on the grid. And
consumers pay for it all.
This congestion game continues because there still is insufficient
government oversight of the power system. It is an expensive reminder
that the legacy of deregulation remains. While state and federal
lawmakers should develop plans to re-regulate the electricity system,
some short term fixes are in order:
- The ISO ought to refuse to pay for the congestion manufactured by the power companies.
- Federal regulators should toss out the firms’ licenses to sell unregulated power.
- Most importantly, Schwarzenegger should immediately shred the
energy contracts that facilitate these schemes and seek compensation
and penalties for the money that has been stolen from Californian
But to do that, Arnold will have to look Sempra executives in the eyes and say: "Hasta la vista, donor."
Read more about the new energy schemes in the San Diego Union Tribune.