Somebodys Gonna Pay!
It was a moment to remember. On Jan. 4, The Orange County Register posed a powerful question on its editorial page: "Who will and should bear the biggest burden" of paying current high electricity costs in California? "Utility company shareholders? Ratepayers? Taxpayers?"
After correctly framing the issue, however, Cathy Taylor's Register editorial crew fizzled, returning immediately to their usual fare: mind-numbing non sequiturs, fanciful historical revisionism and circular logic decipherable perhaps only by the inmates of the Fairview state mental hospital.
"The burden may be on ratepayers, taxpayers and shareholders to foot the bill for this debacle," the Register rambled. "But the burden for the hard work of thinking through the business of the power industry is squarely on the shoulders of the [utility] companies."
Of course, the corporate cheerleaders at the Register did not point out that it was the utility companies themselves that did the "hard work of thinking through the business of the power industry" in 1996. With the help of political pals like then-Governor Pete Wilson, those utilities devised the current, scandalous electric-deregulation law.
Sadly, the Reg never bothered to answer its own question about who is responsible for paying the costs of electricity price fluctuations. For that answer, simply read the enabling legislation, Assembly Bill 1890. That bill ultimately became the deregulation law, and it unambiguously guaranteed that utility companies would bear future higher electricity costs until the market became completely unregulated. "This bill provides safeguards for residential customers," AB 1890 states. It then goes on to promise, not rate hikes, but a "firewall" of price protections that ensured ratepayers "no less than a 10 percent" reduction by Jan. 1, 1998, and an additional "reduction of no less than 20 percent by April 1, 2002."
But before you start to think that the utility companies were being generous, consider what they got in return as they supposedly marched toward a consumer-friendly, competitive market: a $28.5 billion ratepayer subsidy to cover bad utility investments, interest-free, multibillion-dollar loans funded by ratepayers and a protective regulatory scheme that blocked out-of-state energy producers from entering California's $23 billion annual power market.
To help thwart pro-consumer countermeasures, a smug John E. Bryson, chairman of Edison International and Southern California Edison, assured the public in 1996 that his deregulation law was a consumer victory. "We'll [Edison] take the risk of the reality that electricity price varies by the hour of the day, season of the year and all sort of stuff," he said.
That mundane "sort of stuff" has become much more meaningful lately. With wholesale electricity more expensive than anticipated, Bryson lobbied for and, on Jan. 4, got the pliable California Public Utilities Commission (PUC) to kill the only consumer benefit of the deregulation law: short-term price controls. The PUC approved an "emergency 90-day" 7 percent to 15 percent rate hike.
But the PUC's gift is not enough for the insatiable utility executives. Within an hour of the rate hike announcement, power execs clamored for a billion-dollar-plus taxpayer bailout.
The Register is lost in this ugly reality. Deregulation—their proud ideological chant for decades—has been a disaster. Governor Gray Davis and legislative leaders are huddled once again with industry lobbyists. Their goal? Not further deregulation, but rather a new bond scheme that puts taxpayers on the hook for as much as an additional $11 billion for utility company stockholders. Having watched California's deterioration in horror, several other states considering deregulation are now fiercely backpedaling.
While the rest of California worries about how badly consumers are going to get screwed, the Reg continues its dereg drumbeat. In their Jan. 4 editorial, "Finding a Way Out of Electricity Crisis," they covered their eyes and ears, blindly insisting, "We believe that the best solution is to keep moving toward deregulation."
This dementia shouldn't be surprising. It was the Register in its Dec. 31 "Year in Review" section that bizarrely named the yet-to-materialize "Clinton recession" as the fourth greatest event of 2000.
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