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Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Steven J Kean X-To: dcasse@whwg.com, dg27@pacbell.net X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_4\Notes Folders\Discussion threads X-Origin: KEAN-S X-FileName: skean.nsf This guy has it right. ----- Forwarded by Steven J Kean/NA/Enron on 01/02/2001 12:17 PM ----- Jeff Dasovich Sent by: Jeff Dasovich 01/02/2001 10:37 AM To: mpalmer@enron.com, skean@enron.com, Karen Denne/Corp/Enron@ENRON, Joe Hartsoe/Corp/Enron@ENRON, Susan J Mara/NA/Enron@ENRON, Linda Robertson/NA/Enron@ENRON, Mary Hain/HOU/ECT@ECT, Cynthia Sandherr/Corp/Enron@ENRON, Alan Comnes/PDX/ECT@ECT, Paul Kaufman/PDX/ECT@ECT, Sandra McCubbin/NA/Enron@Enron, Richard Shapiro/NA/Enron@Enron, James D Steffes/NA/Enron@Enron, Sarah Novosel/Corp/Enron@ENRON cc: Subject: Editorial by George Miller in SF Chronicle--"Another Utility Bailout Should Leave Us Cold " Another Utility Bailout Should Leave Us Cold George Miller Sunday, December 31, 2000 ,2001 San Francisco Chronicle URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2000/12/31/E D134916.DTL OUR CURRENT energy problems are urgent and serious. But before the governor and the Public Utilities Commission cut yet another deal costing consumers billions of dollars, perhaps they should pause to ask the public what kind of system it wants and what it will end up with after investing billions more. Failure of energy deregulation could speed real deregulation that might benefit consumers with real capacity and real competition. But this will not happen if the focus is only on California utilities and their shareholders. The original deregulation deal was designed, as I see it, to keep competition out of California -- and to maximize the rates consumers would pay for every bad past business decision by PG&E and other California utilities. Similarly, current bailout discussions are about forcing California ratepayers to pay for the failed deregulation plan designed by the utilities themselves. Once again, the companies seek to maximize profits and socialize the losses. Following on the heels of California's deregulation, the state's utilities came to the congressional delegation and urged us to protect the plan from federal deregulation efforts. They argued that the deal they cut was good for all parties. Their executives repeated time and again that they might benefit from the plan's cap on consumer prices -- and that there was a risk to them if wholesale prices were to go up. This, they told us, is the marketplace. They were willing to absorb the risk. This was the brave new world of free markets. But markets are never free. From the beginning, this deregulation plan was designed to buy the California utilities time and advantage. Initially, consumers saw lower rates, but not as low as real competition might have provided when compared to the heavily sheltered market of the past five years. Now, because this rigged marketplace has failed, the utilities want again to put their hands into the ratepayers' pockets. At first, PG&E and Southern California Edison asked the Public Utilities Commission to have California consumers pay the entire cost of deregulation's risks. Their idea did not pass the smell or the laugh test. Now the utilities look for a way to repackage their old proposal, including a substantial rate increase. The rationale is that the utilities may collapse financially. This threat is supposed to inspire Gov. Gray Davis and the PUC to quickly put the ratepayer on the hook for the utilities' failures. During the past year, dozens of utilities have merged all across America. PG&E, for example, may not be worth much to its shareholders, but like AT&T, it may be worth something to its competitors. This is the genius of the American marketplace. PG&E shareholders bought the stock, assuming the risk. Why should the ratepayers be asked to insulate them from that risk? During this past year, tens of billions of dollars of market capitalization were lost by various Silicon Valley high-tech firms. Their shareholders do not get the benefit of going to the PUC and getting a taxpayer bailout. The ratepayer has already paid for this energy under a contract that utilities struck with the people of the state of California. Any additional payment by the ratepayer is a financial bailout. Any prudent investor would ask what the return will be before handing over billions of dollars. The ratepayer deserves an answer, as well as some equity or other consideration. George Miller is a Democratic congressman from Martinez.
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