By Matt Coker
By R. Scott Moxley
By Charles Lam
By Nick Schou
By Gustavo Arellano
By Gustavo Arellano
By Steve Lowery
By R. Scott Moxley
The week before Christmas, Southern California Edison mailed rate-increase notices to its 4 million power customers. Edison executives could have waited a couple of days until the Public Utilities Commission (PUC)—the government body empowered to set electricity rates—had actually held the public hearing required to approve the rate hike, but who has time for burdensome formalities when precious stockholder dividends are at stake? And when the PUC is rarely little more than a rubber stamp for what has already been decided in Edison's swank boardroom?
But appearances are key in any con game, and PUC president Loretta Lynch did her best to appear outraged on Dec. 27, when she learned of the unapproved notices. During a commission meeting, she questioned Edison's boldness to "just willy-nilly" mail "whatever you want to mail" regarding electricity rate hikes. Lynch lectured Edison attorney J.P. Shotwell, "It is quite astonishing that you would choose to ignore our rules and procedures on such an important matter."
Once such superficialities had been tidied up, there was apparently nothing more important than granting the wish list crafted by Edison executives, who've grown fat, happy and rich running their highly profitable, government-protected monopoly. So obviously un-peeved were Lynch and her commission that they voted unanimously in the same meeting to violate the single biggest pro-consumer component of the 1996 deregulation law: no rate increases while the public is forced to subsidize the power companies (Edison, Pacific Gas & Electric and San Diego Gas & Electric) to the tune of at least $30 billion.
The PUC's decision was made easier by the appearance of an energy crisis. In the days leading up to the meeting, the utility companies' focus turned from generating power to generating hysteria. Edison chairman John Bryson hit radio and TV, claiming that his company —which recently handed its shareholders the largest profitable dividends ($375 million) in company history—would go into bankruptcy without further massive public assistance.
Aiding the utility companies in their propaganda efforts was none other than the Los Angeles Times. From Dec. 8 through Dec. 28, the Times was relentless in the publication of sensational front-page headlines—most prominently containing the identical term used in utility company press releases: "crisis." For example, on Dec. 18, 19 and 20, it was "Power Crisis." And just as the PUC was sifting public sentiment, the Times weighed in on Dec. 24 with "Energy Crisis Is Making People Feel Powerless." The paper followed that with a manipulative Christmas piece, "Nonprofits, Others Feel Energy Price Pain: Facilities such as schools and hospitals are suffering because they cannot pass along increases."
It is odd that a recent, albeit informal and unscientific, Weekly survey of 27 Orange County residents found that not a single person had been affected by the "crisis." In fact, more than half of those interviewed were not even aware of any sort of electricity emergency.
Devised by the utility companies themselves, deregulation was supposed to have lowered consumer rates. In 1996, Bryson promised "for the average homeowner, a 10 percent drop by Jan. 1, 1998" to be followed "by what we believe will be at least a 20 percent drop by the end of 2001." In short, he asserted, deregulation of his industry would mean "rapid, real declining costs" for electricity consumers.
The industry won its 1996 deregulation law with the bipartisan support of Sacramento legislators. But the sales pitches aren't so rosy anymore. After the Dec. 27 PUC hearing, Edison officials told reporters that the company wants "about an 82 percent increase" in electricity rates starting this month. John Fielder, a senior vice president at Edison, suggested that a 30 percent hike would do in a pinch. "This isn't science," he said.
No, it's more like legalized robbery. If the utilities don't get the increases, Edison officials have strongly suggested they would inflict rolling electricity blackouts, Soviet-style rationing, and powerless hospitals and traffic lights on its hapless customers. It would be, according to Edison VP Stephen Pickett, very unpleasant.
Cocky utility executives aren't the only ones able to back up a threat. After hearing the industry bark, California Senate Leader John Burton (D-San Francisco) made a legislative proposal that must have jolted Bryson's loafers. To help insure a steady, fair-priced supply of energy, Burton suggested the state consider buying the power-transmission lines from the utilities.
The industry's swarm of PR flacks reacted without amusement. Burton's idea would be, one flack squealed in late December, "dead wrong, okay?"