Another bailout looms

SFBG News | February 21, 2001 | Another bailout looms 

 Consumer groups criticize Governor Davis's voter-proof plan to 
buy the grid 

By Savannah Blackwell
 
Gov. Gray Davis assured Californians Feb. 16 that the deal he 
intends to cut with the state's utilities will protect consumers 
from higher energy rates and keep the lights on. But if you take 
a look at the proposal's bare bones (all that is available at 
this point), it looks like consumers are going to get severely 
shortchanged. 

In fact, consumer groups warn, Davis's plan could stop any effort 
to dump deregulation at the ballot. 

And while news organizations like the San Francisco Chronicle 
reported that Davis was taking the middle road between the 
customers and utilities, Davis's plan could actually cost 
ratepayers billions more than the billions we've already forked 
over. 

Davis didn't give any details Friday when, during a brief press 
conference, he called for the state to buy the utilities' 
transmission system (the grid). It's been valued at $3.1 billion 
to $3.8 billion by state officials. But the numbers being thrown 
around in Sacramento corridors are twice that: $6 billion to $8 
billion. Consumer groups such as the Foundation for Taxpayer 
Rights in San Diego have urged Davis and legislators to seize 
power plants and other sources of energy generation (Pacific Gas 
and Electric, for example, owns more than 100 dams) in order to 
protect consumers, rather than use taxpayers' money to purchase 
power on behalf of the utilities or to bail them out. 

Davis's plan undermines any future voter initiatives against 
deregulation. It may call for the utilities to drop their federal 
lawsuits against ratepayers suits demanding that the state pay 
the utilities $12 billion, the supposed debt incurred from buying 
power at high rates (see "Guilty Players," 2/14/01).

The problem is that if Davis attaches the settlement of the 
federal lawsuits to his plan, the utilities can argue that the 
issue now lies in the feds' jurisdiction. As Doug Heller, the 
consumer advocate at the Foundation for Taxpayer Rights, points 
out, that gives them the power to argue that we, the state 
taxpayers and consumers, can't do anything about it at the ballot 
box. The foundation is considering placing an initiative on the 
ballot that would reregulate the electric industry for small 
consumers (mainly residential customers). Neither Davis nor the 
utilities wants that to happen. So, Heller tells us, they're 
doing what they can to undermine the voters' right to undo 
deregulation. 

"The utilities, the generators, and Davis all have an interest in 
making sure this bailout happens," Heller says. "And they have 
the audacity to try to corner the public and voter-proof this." 

E-mail Savannah Blackwell at savannah_blackwell@sfbg.com 
[savannah_blackwell@sfbg.com] . 
  
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