Illustration by Bob AulCalifornia's power companies are threatening bankruptcy, massive employee layoffs, rolling statewide blackouts and Soviet-style rationing. Utility company executives want an estimated $10 billion taxpayer-funded bailout and hope to saddle the state's power consumers—who already pay the highest electricity rates in the nation—with an 82 percent increase per month. Frightened, out-of-state corporations are reportedly backpedaling on launching new businesses here. And consumers have yet to see the fruits of a competitive power market.
It's a pending economic and political disaster scary enough to drive famously stoic Governor Gray Davis to hand-wringing agitation.
But such a nightmare—skyrocketing rates, billion-dollar taxpayer bailouts, economic instability and no competition—was foreseen in what would surely have astonished Nostradamus himself. Though they haven't been given appropriate credit, it was—ironically—our utility company friends who first predicted an electric doomsday. Of course, their prophecy wasn't exactly perfect.
Recall the fall of 1998. Consumer advocates were warning that the utility industry-backed 1996 deregulation law would be a catastrophe, especially for consumers. They placed Proposition 9 on that November's ballot in hopes of initiating immediate reforms, such as anti-price-gouging measures.
With their decades-old gravy train threatened, Southern California Edison and the state's two other electric monopolies (San Diego Gas & Electric, and Pacific Gas & Electric) reacted swiftly. Dipping into their government-guaranteed profits, they bombarded statewide television audiences with anti-Prop. 9 commercials. The ad campaign was as simple as it was deceitful: the deregulation law, they strenuously asserted, protected consumers and needed not a single reform.
Utility company executives have never lacked chutzpah or cash, especially for propaganda. One industry ad, titled "It's a Backward Step for California," began with the solemn voice of a trustworthy-sounding man explaining, "Going backward is pretty strange, which is why Proposition 9 makes no sense. It would undo California's working electric system and reverse our forward progress." The accompanying visual was reversed video footage of runners at a track, a school bus, ostriches, racing motorcycles and a space shuttle launch.
"Prop. 9's backward thinking," the narrator continued with increasing alarm, "would repeal our state's emerging competitive electric system. In fact, all we have to look forward to if Prop. 9 passes is higher electric rates and higher taxes." The accompanying visual featured reversed video footage of runners, trains, a horse race, freeway traffic and marathon runners.
"Prop. 9 makes no sense," he repeated. "It's a backward step for California." The accompanying visual was people walking backwards in slow motion.
Another TV ad featured consumer advocate David Horowitz, who accepted $106,000 from the utility companies to trash talk Prop. 9. Horowitz, who still insists he is an independent journalist, said at the time that he was "delighted" to stand with the utilities against consumer groups. His mug fast became the poster face for the power industry's anti-reform crusade.
"Proposition 9 is filled with false promises," he said as he stood in front of his trademark Fight Back! with David Horowitz television-show logo. "Proposition 9 would repeal competition in our electric system, a backward step for California. It would repeal the rate cap just added to the state law and result in higher electric rates."
In a press release, a ballsy but richer Horowitz said, "I have read Prop. 9, and I think it is anti-consumer and anti-taxpayer." He then called on voters to keep the 1996 deregulation law intact because it "will lead to lower electricity rates."
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Without a hint of conscience, Horowitz finished by saying, "It offends me that people are trying to mislead the voters."
Thanks in part to the utility companies' pre-election advertising blitz with the likes of Horowitz, in November 1998, a whopping 73 percent of California voters opposed reforming the deregulation law that today is the laughingstock of the nation.
Next week: mainstream media whores sleep with the power industry.