While wholesale prices of electricity this summer are averaging about what they were before the power crisis began two years ago, there's little hope most Californians will ever stop paying today's highest-in-history rates.
For federal and state regulators whose supposed job is to look after the interests of consumers are taking steps that may assure there can never be relief. Prices may in fact rise even higher.
That's the meaning of a series of actions by the alphabet soup of
agencies known as FERC (the Federal Energy Regulatory Commission) and the PUC (state Public Utilities Commission). These two politically appointed boards are acting to guarantee the financial health of both the generating companies who now admit they raped California wallets last year and the large utility companies that advocated the 1996 deregulation law which set this state up for electric sticker shock.
FERC's action may bear the most potential damage, as it threatens to expose the state to more phony power transfers like the ones that drove prices up astronomically during the height of last year's blackout threats. While that crisis raged, Gov. Gray Davis and consumer advocates here steadily maintained that imposition of a price cap on interstate wholesale power sales would stop the bleeding.
But FERC, the only outfit empowered to set price limits, refused to act for nine months after the first state request. When it finally did set a limit of $92 per megawatt hour, wholesale prices immediately settled back to pre-crisis levels.
Now FERC is raising its limit to $250 per megawatt hour, effective Oct. 1, about 10 times what power cost before the crunch began. That's better than the $1,000-plus some companies were charging at the peak of the crisis, but it's still piratical.
It sets up generating companies like Mirant, Duke Power, Dynegy and Sempra for repeats of the scandalous trades they've admitted conducting last year, phony deals where they pretended to sell power to out of state companies for low prices and then bring it back at costs as much as 5,000 percent higher. Actually, in most cases the power never left California.
The new cap won't allow profit multiples to go that high, but it still
invites abuses like the ones for which FERC says it will soon order large rebates.
"It is utterly senseless to remove the one thing that had worked to
protect consumers from the profiteering," said Douglas Heller, energy specialist for the Foundation for Taxpayer and Consumer Rights. "Despite all its talk about restraining out-of-control corporations, the Bush administration is now turning the power system over to the Enrons and others who stole billions from California last year. Everyone knows the energy crisis was a crime perpetrated by unregulated power companies. FERC is reloading those companies' guns."
But FERC is not the only regulatory oufit about to take huge bites out of California bankrolls. The state's Public Utilities Commission is poised to join the pillage.
The PUC the other day proposed changing the rules for use of money raised via record-high electricity rates consumers and businesses have paid over the last 15 months. PUC President Loretta Lynch plans to give about $2.7 billion of that money to Southern California Edison Co. and Pacific Gas & Electric Co., the two companies that played a major role in creating the deregulation
which led them to financial disaster.
Until now, this money has been earmarked as a reserve fund for future power costs rather than to pay debts the utilities piled up while buying electricity from providers like Enron and Duke. With wholesale prices stable for months, the two companies are taking in vast amounts more than they need to cover current costs.
The PUC plans to let those firms keep the extra billions paid by
consumers, essentially forcing ratepayers to make good the gambling debts of huge corporations that bet their futures on deregulation and lost. It would amount to an unprecedented bailout of failed companies that didn't even dump their discredited management during the crisis or afterward.
Taken together, the actions of the two agencies amount to nothing less than a complete betrayal of consumers who were first asked to believe the lie that there really was an energy shortage and then were forced to pay large sums supposedly to insure against a repeat.
Now ratepayers can't even point a finger at either of the major political parties. FERC is dominated by Republicans; Democrats control the PUC. Which means the issue here is not and never has been partisan politics, in spite of the efforts of some politicians to make hay from the crisis. Instead, the question that begs to be answered is why regulators of all political stripes again and again put the interests of shamed companies over those of their
Elias is author of the book "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government's Campaign to Squelch It," now available in an updated second edition. His e-mail address is firstname.lastname@example.org.