Some savor utility crisis

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Dan Walters: Some savor utility crisis

(Published Feb. 2, 2001)

California's utilities are rubbing up against bankruptcy, its politicians are frazzled and getting heat from angry constituents, and out-of-state power generators are being denounced as pirates as the state's energy crisis grows more acute by the minute.

There are, however, three groups who savor a situation that's pumping big bucks into their pockets, and would like it to go on forever: lobbyists, lawyers, and stock and bond brokers.

The crisis has been a bonanza for those who are paid handsomely to persuade politicians. That was very evident this week in an ornate state Senate hearing room that had become the arena for legislation that supposedly would ease the crisis by making the state a multibillion-dollar purchaser of wholesale power through revenue bonds.

The room was packed with close to 100 lobbyists, some of whom had been hurriedly hired by various parties -- Wall Street bond underwriters, for example -- unaccustomed to dealing with California politics. The bond houses, the much-distressed utilities themselves, power generators and brokers, consumer groups, industrial and commercial power users, and public power agencies were among those fielding lobbyists.

In unguarded moments, the professional advocates celebrated their windfalls. The lobbying fees generated by the utility crisis will run into the millions of dollars, and the extra income is welcome during a season when legislative business is slow and time demands from other clients are scant.

The crisis also has spawned dozens of lawsuits in state and federal courts, not to mention reams of filings with regulatory agencies such as the state Public Utilities Commission and the Federal Energy Regulatory Commission -- all running up billable hours for lawyers who plow the arcane field of energy law.

It appears that just about every major party is suing every other party, and even after the politicians do whatever they intend to do, the suits may continue for years.

Indeed, one major piece of the pending legislation deals with short-circuiting the lawsuits that already have been filed. Again, millions of dollars in attorneys' fees will be billed and paid before this business is done.

Normally, trading utility stocks, bonds and other financial instruments is about as exciting as watching gray paint dry. But utility deregulation and the current crisis have generated a high degree of volatility, and sharp traders have taken advantage of the situation by buying and selling the utilities' financial paper on a scale ordinarily reserved for the frantic world of dot-com stocks.

Shares of Pacific Gas and Electric Co. and Southern California Edison are running up and down the pole like squirrels on amphetamines, moving 10, 20 or even 30 percent in a single day as the market responds to the latest rumors of what politicians may or may not do. Most recently, they have been rising sharply after hitting rock-bottom last week, reacting to reports that the state would step in to save utilities from bankruptcy and provide a means for them to pay off their immense debts. Utility bonds have been just as volatile, and sharpies have been making fortunes on both ends of the swing.

In the interests of full disclosure, one should mention one other trade that's also been energized, albeit not with the same financial consequences befalling lobbyists, lawyers and brokers: the news media. Capitol reporters find themselves working long hours in what is usually a slow period, and dozens of out-of-town media outlets have dispatched correspondents to Sacramento.

Gov. Gray Davis' news conference Thursday on energy conservation attracted 16 television cameras, easily a record for this administration and one that reflects the high-profile nature of the story.

DAN WALTERS' column appears daily, except Saturday. Mail: P.O. Box 15779, Sacramento, CA 95852; phone (916) 321-1195; fax: (781) 846-8350 E-mail: dwalters@sacbee.com Recent columns: http://www.capitolalert.com/voices/index_walters.html

-- Swissrose (cellier@azstarnet.com), February 02, 2001


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