Electric Light Orchestra
On Jan. 17, Governor Gray Davis declared a state of emergency and announced plans to use $1 billion in public funds to bail out Southern California Edison (SCE) and the state's two other privately owned power monopolies. If Davis' plan is approved by the legislature, taxpayer funds will be used to purchase electricity at its now-record rate and resell it at a discount to the allegedly cash-strapped utilities. Though the governor didn't mention it, the companies will then be allowed to sell that same electricity back to the public for a profit.
Some observers might call the plan a ballsy con game. Davis, utility executives and politicians in both major political parties describe the bailout as progress. In a late-night television address, the weary-eyed governor reached for Bill Clinton's rhetorical flair but failed. "This is a bridge to a new solution," he said. Public Utilities Commission president Loretta Lynch rubber-stamped the scheme, calling it "a good move. . . . It keeps the lights on."
Closing in on the corporate welfare he has been seeking for months, SCE chairman John Bryson—who takes home $2.7 million annually in salary—knew to keep his mouth shut. Neither he nor his stable of PR flacks were quoted on the governor's bailout in the next day's newspapers.
The self-described watchdogs in the mainstream media had nothing to say about Bryson's conspicuous silence or, for that matter, the unprecedented subsidy. They were too busy endorsing the bailout. The Los Angeles Times—for which Bryson has served on the board of directors —called the plan "sound." Though utility company shareholders have enjoyed hearty, government-guaranteed dividends for decades, the Sacramento Bee whined that the companies had "bled billions" during the past couple of months. The San Jose Mercury News accepted the bailout with the moral outrage of a high school tweaker after three bong hits. "If Californians don't pay as consumers," it lethargically opined, "we certainly will as taxpayers."
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It is not surprising that the state's major publishing companies are backing Davis' quick fix. Although you wouldn't know it from reading their editorials today, all 10 of California's largest newspapers ferociously fought Proposition 9, the 1998 consumer group-backed initiative that would have reformed the now thoroughly discredited 1996 deregulation bill. Thanks in part to the mainstream press, Prop. 9 died at the ballot box.
The Bee branded Prop. 9's reforms "problematic." The Mercury News claimed that any fine-tuning of the law would be "reckless." Nearly hysterical, the San Diego Union-Tribune worried that the deregulation reform "could constitute illegal taking" of utility shareholder assets. The paper has expressed no similar problem with diverting taxpayer funds to utility shareholders.
The San Francisco Chronicle asserted that the pro-consumer initiative would "undo" what it described as a "competitive" electric market. The Riverside Press Telegram resorted to juvenile peer pressure tactics: "Local groups of business and community leaders say Prop. 9 could harm the state's economic recovery. Weighty stuff." The Los Angeles Daily News absurdly pushed the don't-fix-what-ain't-broken angle: "Deregulation," it thundered, "is working."
But perhaps no newspapers were more reprehensible in cheerleading for the utilities than the Times and The Orange County Register. In 1998, the Times urged voters to support the industry position, alleging that reform of the industry-crafted deregulation law would "prove costly." Time has softened memories: on Jan. 9, the paper unceremoniously flip-flopped, calling deregulation an "irrational system" and referring without elaboration to deregulation's "defects." The Times offered no correction or apology to the consumer advocates it had so eagerly dismissed as alarmist kooks just two years before.
Not surprisingly, the Register's handling of the deregulation fiasco has been more spectacular. Like the Times, the Reg can't remember to remind its readers that the paper was a wholehearted supporter of the deregulation law at the heart of today's mess. For example, on Sept. 26, 1996—three days after the deregulation bill was signed into law—the Santa Ana-based paper couldn't contain its jubilation, writing, "Electricity deregulation is a long stride toward giving consumers the benefits of deregulation and privatization in all other areas still needing it: cable TV, airports, air-traffic control, even freeways and water."
Nowadays, the Register editorial crew has had a change of heart. Without acknowledging the obvious about-face, they have proclaimed the deregulation law "silly." On Jan. 4, the paper's editorial staff wrote that "the state reforms of 1996 were not real deregulation." Five days later, the Register flip-flopped on the flip-flop, claiming that it wasn't so much the deregulation law that has been a failure as it was "excessive environmental rules" on the utility companies. A solution to the crisis, the Register advised, will have to come not from Davis, but from the "common sense" of George W. Bush.
On Jan. 14, the Register got its wish when then-President-elect Bush weighed in. He told The New York Times, "The California crunch really is the result of not enough power-generating plants and then not enough power to power the power plants of generating plants."
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