Sacramento Bee

Attached, please find an article from today's Sacramento Bee regarding the SCE MOU, as well as a terrific editorial from Daniel Weintraub regarding direct access.

Californians oppose Edison deal, poll finds

By Amy Chance
Bee Political Editor
(Published Sept. 25, 2001)

Californians by large margins oppose Gov. Gray Davis' proposal to use state-backed bonds to prevent Southern California Edison from slipping into bankruptcy, according to a Field Poll released Monday.

Overall, the new poll found that Californians' concern about the electricity shortage has eased considerably. They give themselves credit for proving power blackout predictions wrong with strong conservation efforts.

But they are in no mood as taxpayers or ratepayers to help bolster the finances of a key investor-owned utility.

The poll noted that Edison "is in danger of declaring bankruptcy" and asked those surveyed whether "to avoid this possibility" they supported a proposal in which Edison would issue $2.9 billion in state-backed bonds to be repaid by its customers over time.

Adults statewide opposed the idea 66 percent to 23 percent; registered voters were against it 68 percent to 21 percent.

Pollster Mark DiCamillo noted that a large majority of Southern California Edison's own customers -- 70 percent -- were opposed to the plan.

One factor, he said, may be the public's view of bankruptcy.

"With PG&E in bankruptcy, nothing has really changed for PG&E customers," he said. "That may have some influence on their attitudes."

The Democratic governor has sought for months to gain legislative support for a plan to prevent Edison from following Pacific Gas and Electric Co. into bankruptcy court, arguing that the state's ability to get out of the power-buying business depends on the effort.

But the Legislature adjourned Sept. 15 without taking final action on a plan. Consumer groups argued vigorously against what they termed a "bailout," and some lawmakers said they didn't see the proposal as a better alternative than bankruptcy.

Davis threatened to call lawmakers back to the Capitol to address the issue within two weeks, angering Senate President Pro Tem John Burton. Both the governor and Burton have since said they intend to negotiate before asking legislators to return.

DiCamillo said the numbers indicate that Davis is pursuing an unpopular path that could affect his own re-election effort.

"If he continues to pursue it -- and all indications are that he's going to -- he's expending more of his own political capital on an issue that is clearly not very popular," DiCamillo said. "He may wish to do that. Some people say that's how you define leadership -- when you take your own personal stances because you think they are in the public interest, (not) what people think at the time.

"But some of the medicine he's prescribing is unpalatable. And some of the Democrats in the Legislature have called him on it and said, 'We're not going to go for this. We're running for re-election, too.' "

A Davis adviser said the findings were "no surprise."

"Utilities aren't popular. That's the reality," said Davis political consultant Garry South.

In May, amid predictions that the state would spend the summer suffering through blackouts, 75 percent of Californians saw the situation as "very serious." That number dropped in the latest poll to 44 percent.

Asked to rate the efforts of various groups and officials to improve California's energy outlook, residential energy consumers put themselves at the top of the list, with 55 percent saying they have done a very good or good job.

Californians also saw industry and business as willing to pitch in, as 40 percent described their efforts as good or very good.

They gave higher "poor" marks, meanwhile, to a long list of others -- Davis, the Legislature, President Bush, the state Public Utilities Commission, the state's private utilities, out-of-state energy providers and the Federal Energy Regulatory Commission.

And about half said they continue to see rate increases that hit earlier this year as "very" or "somewhat" serious, and expect rates in their area to rise even more in the next 12 months.

"If you asked them to rate how they got out of this situation, they'd say we got ourselves out of it by cutting back -- the politicians didn't help much, the regulatory agencies didn't help much," DiCamillo said. "But they're still irritated because rates have gone up, and they expect them to go up further.

Daniel Weintraub: Now it's illegal to purchase your own electricity

(Published Sept. 25, 2001)

Buying your own has been banned in California. Electricity on the open market is now officially contraband. Like prescription drugs, which you can get only from a licensed pharmacy, electricity is something you can buy from your local utility, which can make its own or buy it from the state. Beyond that, it's an illegal substance.

It was the grand hope of a deregulated electricity industry that you and I and the factory down the street would be able to buy our own juice from the lowest bidder. It might have been a pain -- kind of like shopping for telephone service. But just as breaking up Ma Bell spawned great leaps in mobile phone technology, busting the utility monopoly was supposed to usher in a new era for electricity.

Not that there were mobs of shopkeepers and apartment dwellers lobbying the Legislature for consumer choice. It was the biggest users who really wanted to cut their own deals. Under the old, regulated system, the huge factories that make steel and cement and computers, and gobble up electricity by the megawatt, were paying 50 percent more than their competitors in other states. They wanted the right to shop around.

The Legislature agreed, but only to a point. Lawmakers permitted choice, but they rigged the new system in its early years to favor the utilities that were a powerful force in the Capitol. They made it nearly impossible for the private generators to undercut the utilities' pricing, and they put roadblocks in the way of cities that might have gathered their small customers together and used their market clout to negotiate for lower rates.

The government spent millions on an advertising campaign trying to persuade us of the wisdom of buying our own energy. But there weren't really many deals to be had. Now there are none.

Consumer choice died a quiet death last week at the hands of the Public Utility Commission. Its demise was collateral damage from the mess that was California's experiment in electricity deregulation.

Choice couldn't survive because the state, which now controls the energy business, can't cope with the competition. If Californians were allowed to buy their own electricity, pretty soon most of us would figure out that we are getting a rotten deal from the state. As more people left the state system, the few that remained would have to pay higher and higher rates to keep the books balanced. Eventually, the whole thing would collapse of its own weight.

We're in this fix because Gov. Gray Davis, when he stepped in to buy electricity on behalf of the failing utilities in January, went too far. Craving stability at any price, Davis bought almost all the energy the state will need for the next few years and much of what we'll need for a decade. And he bought that electricity at the top of the market, paying prices that had never been so high, and might never be again.

As those prices were passed along to consumers, suddenly choosing your own electricity supplier got more attractive than ever. Thousands of businesses jumped at the opportunity. Among them were the big steel factories in the Inland Empire region east of Los Angeles.

Tamco Steel of Rancho Cucamonga, which makes rebar, realized its annual electricity bill was going to climb from $12 million to $26 million if it stayed with the local utility, Southern California Edison, according to a report in the Riverside Press-Enterprise. The company, which just laid off 70 people, one-fourth of its workers, desperately started searching for cheaper energy. It signed a deal with a private supplier on Sept. 1, just days before the state slammed the door shut on such opportunities.

That's a scenario that was repeated up and down the state all summer, and it illustrates why, in the twisted world of electricity regulation, the Public Utilities Commission had to step in and just say no. Without the ban there would have been a "jailbreak," in the words of one commissioner, leaving small customers or the taxpayers holding the bag.

That decision might have been unavoidable, given the circumstances. But it didn't have to be this way. Davis could have swallowed hard and ridden out the storm earlier this year. He could have signed electricity contracts for shorter terms at higher prices. That would have been painful, financially and politically, but once the crisis passed, Californians would have been free again to set their own course. Instead, we are imprisoned in a high-priced, state-run system, and will be for years to come.

California, in fact, is worse off than it was in 1995, when companies stuck with high utility rates first asked for the freedom to buy their own electricity. This does not seem like an unreasonable request, an act that should be against the law. Yet now it is. The real crime, though, is the state bungling that destroyed the electricity industry.