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CounterPunch
November
11, 2002
Gray Davis'
Trail of Broken Promises
by JASON LEOPOLD
Two days after Democrat Gray Davis was reelected
governor of California in one of the nation's most contentious
gubernatorial races, he stuck the proverbial knife into the backs
of the millions of California residents who voted for him--albeit
reluctantly--by forcing consumers who were victimized by the
state's disastrous experiment with deregulation to contiinue
paying sky-high electricity rates as a way to bail out the state's
financially strapped utilities.
When Davis' reelection campaign kicked
into high gear earlier this year, his administration spread a
rumor that the incumbent governor was going to order state regulators
to slash electricity rates so Davis could win the support from
the Californians who abhorred his handling of California's two-year
energy crisis.
The rumor didn't seem that far-fetched.
Davis told the San Francisco Chronicle when he was first elected
governor in 1998 that the Legislature's job is to implement his
vision. He hand-picked Loretta Lynch to serve as president of
the Public Utilities Commission two years ago, just six months
before the energy crisis reared it's ugly head, and would not
allow her to move an inch without first consulting him.
During a press conference last year,
Davis said he could solve the state's energy crisis in "20
minutes" by simply increasing electricity rates. Ultimately,
when California's utilities were left on the brink of bankruptcy
and could no longer afford to buy power for its customers, rates
went up a record 43 percent and Davis positioned Lynch to absorb
most of the backlash from angry consumers so as not to tarnish
his reelection campaign. Publicly, Davis criticized Lynch and
the record rate hike. But behind the scenes it was Davis who
told Lynch to get it done, according to a few of the governor's
long-time aides.
The rate hike was supposed to be a short-term
fix and the money was to be used by Southern California Edison,
San Diego Gas & Electric and Pacific Gas & Electric,
the utilities that were left insolvent as a result of the energy
crisis, for the sole purpose of buying electricity for its customers.
That much we believed. When power prices plummeted last summer,
both utilities were collecting upwards of $500 million a month
in extra cash, which could have easily been used by SDG&E,
Edison and PG&E to pay off a mountain of debt the companies
incurred when the price for power exceeded the legal limit the
companies were allowed to charge its customers.
But state regulators wouldn't allow the
utilities to use the money in that fashion because it would have
been seen as a sure sign that California was bailing out the
three utilities, who lobbied hard for deregulation in the first
place, at consumers' expense and it would have almost certainly
tainted Davis' reelection campaign.
That's all changed now that Davis is
back in office for a second term.
Last week, Davis' PUC voted unanimously
in favor of keeping the rate increase locked in indefinitely
and said that the money, an extra $5 billion a year, will now
be used by SDG&E, Edison and PG&E to pay creditors. The
price of California's disastrous experiment with deregulation
is quickly approaching the $100 billion mark. And it's the unwitting
consumer who is forced to foot the bill.
It's no coincidence that the PUC vote
took place two days after Davis was voted back into office. It's
unfortunate, however, that no one saw this coming because if
word leaked out that the PUC was going to sock consumers with
the costs of the energy crisis, Davis may not be governor of
California today.
Consumer groups, specifically the Foundation
for Taxpayer and Consumer Rights in Southern California, sounded
an early alarm that the Davis administration would eventually
bail out the state's three largest utilities when the companies
cried poverty in late 2000. The activists were called liars and
quacks by lawmakers and the media when they dressed up as pigs
and challenged the utilities claims of financial distress on
the steps of the Capital building in Sacramento. But they turned
out to be right all along. It's Governor Davis who spent the
past two years giving Californians lip service.
Jason Leopold can be reached at: jasonleopold@hotmail.com
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