FacebookTwitterRedditEmail

Report: Cal Energy “Crisis” Was A $71 Billion Hoax, And It’s Not Over

“It Wasn’t a Shortage, It Was a Shakedown” Report: Cal Energy “Crisis” Was A $71 Billion Hoax, And It’s Not Over

Santa Monica, CA. –The Foundation for Taxpayer and Consumer Rights (FTCR) issued the first comprehensive review of the California energy crisis today, exactly one year after the first rolling blackouts hit California. Using government and industry data, the 58 page report, entitled “Hoax: How Deregulation Let the Power Industry Steal $71 Billion From California,” shows that the California electricity system did not fail according to the laws of supply and demand, as it has been widely portrayed.

The California energy crisis, instead, was a hoax — orchestrated by a power industry freed from price regulation — that will cost $2,200 for every Californian. For nearly a year, the energy industry, state officials and President Bush claimed there was a shortage of energy in California. But the crisis suddenly disappeared late last spring after Governor Gray Davis committed the state to spending at least $43 billion for energy over the next twenty years.

The report shows that the power industry manufactured blackouts and threatened more of them as tools to gain unprecedented profits and overpriced, long-term contracts during the crisis. The report also warns that unless the state of California regains control of its electricity supply, and makes it publicly accountable, additional artificially-created crises will occur in the immediate future.

“The energy crisis was a hoax, set up by deregulation, to suck billions of dollars out of the state,” said Harvey Rosenfield and Doug Heller of FTCR, a non-profit, non-partisan research and advocacy group based in California. “The utilities, energy companies and power traders backed deregulation because they knew it would be a license to steal. Once freed of state scrutiny — once the cop was off the beat — they held the state hostage until we agreed to pay their demands. When they stole as much as they thought they could get away with, the ‘crisis’ mysteriously disappeared — leaving the people of California stuck with the tab.”

“It wasn’t a shortage, it was a shakedown,” FTCR said.

Among its findings, the report shows that:

The rolling blackouts, which occurred on generally low-demand days, were not caused by a shortage of power plants, but by energy companies looking to maximize their prices and profits. Throughout late 2000 and 2001, when prices skyrocketed, California used less electricity than prior years, in which prices were stable and there were no blackouts. Californians overpaid $8.5 billion for electricity between January and October of 2001 alone — and will overpay at least another $20.5 billion over the next decade. While the U.S. entered a recession during the first half of 2001, power companies, such as Enron, Duke and Reliant, reaped unprecedented windfalls.

The crisis suddenly ended — without the predicted summer blackouts — not because of Californians’ conservation, mild weather or new power plants, but because the energy industry had achieved its goals, and was facing investigations and legislation that threatened to “kill the goose that laid the golden egg”: deregulation.

More Crises Unless Deregulation Ended

The report concludes with a series of policy prescriptions including the development of a long-range plan for a hybrid energy system that is part private and part publicly-owned power, and well regulated. The study also calls for regulatory and statutory changes that will save consumers billions of dollars, such as a retroactive ban on “direct access,” a re-allocation of the electricity rate structure and the formation of a Consumer Utility Board.

CONTACT: Doug Heller – 310-392-0522 x309

Jeffrey St. Clair is editor of CounterPunch. His new book is The Big Heat: Earth on the Brink co-written with Joshua Frank. He can be reached at: sitka@comcast.net. Alexander Cockburn’s Guillotined! and A Colossal Wreck are available from CounterPunch.

bernie-the-sandernistas-cover-344x550
Weekend Edition
January 24, 2020
Friday - Sunday
Paul Street
A Letter From Iowa
Jim Kavanagh
Aftermath: The Iran War After the Soleimani Assassination
Jeffrey St. Clair
The Camp by the Lake
Chuck Churchill
The Long History of Elite Rule: What Will It Take To End It?
Robert Hunziker
A Climate Time Bomb With Trump’s Name Inscribed
Andrew Levine
Trump: The King
Jess Franklin
Globalizing the War on Indigenous People: Bolsonaro and Modi
James Graham
From Paris, With Tear Gas…
Rob Urie
Why the Primaries Matter
Dan Bacher
Will the Extinction of Delta Smelt Be Governor Gavin Newsom’s Environmental Legacy?
Ramzy Baroud
In the Name of “Israel’s Security”: Retreating US Gives Israel Billions More in Military Funding
Vijay Prashad
What the Right Wing in Latin America Means by Democracy Is Violence
Jeremy Kuzmarov
Biden’s Shameful Foreign Policy Record Extends Well Beyond Iraq
Louis Proyect
Isabel dos Santos and Africa’s Lumpen-Bourgeoisie
Nick Pemberton
AK-46: The Case Against Amy Klobuchar
Evaggelos Vallianatos
Promtheus’ Fire: Climate Change in the Time of Willful Ignorance
Linn Washington Jr.
Waiting for Justice in New Jersey
Ralph Nader
Pelosi’s Choice: Enough for Trump’s Impeachment but not going All Out for Removal
Mike Garrity – Jason Christensen
Don’t Kill 72 Grizzly Bears So Cattle Can Graze on Public Lands
Joseph Natoli
Who’s Speaking?
Kavaljit Singh
The US-China Trade Deal is Mostly Symbolic
Cesar Chelala
The Coronavirus Serious Public Health Threat in China
Nino Pagliccia
Venezuela Must Remain Vigilant and on Guard Against US Hybrid Warfare
Robert Fantina
Impeachment as a Distraction
Courtney Bourgoin
What We Lose When We Lose Wildlife
Mark Ashwill
Why Constructive Criticism of the US is Not Anti-American
Daniel Warner
Charlie Chaplin and Truly Modern Times
Manuel Perez-Rocha
How NAFTA 2.0 Boosts Fossil Fuel Polluters, Particularly in Mexico
Dean Baker
What Minimum Wage Would Be If It Kept Pace With Productivity
Mel Gurtov
India’s Failed Democracy
Thomas Knapp
US v. Sineneng-Smith: Does Immigration Law Trump Free Speech?
Winslow Myers
Turning Point: The new documentary “Coup 53”
Jeff Mackler
U.S. vs. Iran: Which Side are You On?
Sam Pizzigati
Braggadocio in the White House, Carcinogens in Our Neighborhoods
Christopher Brauchli
The Company Trump Keeps
Julian Vigo
Why Student Debt is a Human Rights Issue
Ramzy Baroud
These Chains Will Be Broken
Chris Wright
A Modest Proposal for Socialist Revolution
Thomas Barker
The Slow Death of European Social Democracy: How Corbynism Bucked the Trend
Nicky Reid
It’s Time to Bring the War Home Again
Michelle Valadez
Amy Klobuchar isn’t Green
David Swanson
CNN Poll: Sanders Is The Most Electable
Kollibri terre Sonnenblume
Our Dire Need for “Creative Extremists”—MLK’s “Letter from Birmingham Jail”
Jill Richardson
‘Little Women’ and the American Attitude Toward Poverty
David Yearsley
Watching Star Wars in Berlin
FacebookTwitterRedditEmail