The California power-cost mystery : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

Published Monday, May 28, 2001, in the San Jose Mercury News


The opinion of the Mercury News

The power-cost mystery

Is state treasury being drained to buy electricity? Who knows? Gov. Davis refuses to say

HERE WE ARE on Memorial Day, summer's threshold, fixated on early warning systems for power blackouts on hot days. But most of the discussion is not about the kind of warning Californians most urgently need.

Sure, it would be nice if homes and businesses had an hour's notice before losing electricity. Alerts 24 or 48 hours ahead would be even nicer, except that they'll be based largely on guesswork, and state officials concede that two-thirds of these probably will be false alarms. The obvious danger is that people will stop paying attention to them.

What people need most, however, is an entirely different kind of warning. And Gov. Gray Davis is sitting on the information that would make it possible.

We need to know whether Davis's strategy of having the state buy power and resell it to customers is working. Working in the sense that it will keep the lights mostly on, and give the utilities and power generators time to restructure their relationships. And working in the sense that it won't drain the state treasury of money needed for everything else.

No one has ever before done what Davis is trying to do now. It is a calculated bet, at best. It may work. It may not.

For it to work, bonds will have to be sold to replace the money going to buy power. Then over 15 years, ratepayers will pay off the bonds as part of their utility bills.

But is the state purchasing enough power outside the expensive day-to-day market, and at the appropriate prices, to support this scheme? No one outside government knows, because Davis has imposed an information blackout.

Ostensibly this helps the state make better deals with the power generators. We doubt it really works that way. They know what prices they're getting. It's the rest of us who don't.

A few months ago, Gray Davis seemed a likely Democratic nominee for president. Last week, a poll found 51 percent of Californians disinclined to accept Davis's ``trust me'' stance on the energy crisis.

If Davis's plan is working, more power to him. If not, we need to know. It's the governor who'd better take those poll numbers as an early warning.

-- Martin Thompson (, May 28, 2001


Good news is usually not hidden or withheld. The fact that there is an "information blackout" likely indicates that the news is worse than imagined to be even possible.

When California tries to sell those "bonds", the gig will be up. Bondholders will need and want to know exactly how, and from what revenue stream, they will be repaid. For this to occur, utility rate allocations for bond repayment must be authorized and established. And these surcharges must be in ADDITION to covering the FULL cost of electricity, prospectively. Realizing this, why did the California Legislature fail to authorize immediate sale? Was the delay a back room deal to delay the Day of Reckoning for as long as possible?

Expect electricity rates to double, or even worse. Expect the cost of moving vans out of California to be totally prohibitive. Expect low value to weight items to be very cheap. How much further down it will cascade is anybody's guess; but the uncertainty and suspense bring about a definite sense of Deja Vu - December 1999.

-- Robert Riggs (, May 29, 2001.

Yes, it's the Great California Central Valley (breadbasket for nearly 40% of America's food) that is going to suffer the most. Such cities as Red Bluff (North Central Valley) are traditionally listed, each summer, as among the hottest spots in the country, with temps sometimes reaching 118 degree highs.

-- JackW (, May 29, 2001.

R. Riggs, you are, oh, so right. No news is bad news under these dire circumstances.

-- JackW (, May 29, 2001.

Re: why did the California Legislature fail to authorize immediate sale? Was the delay a back room deal to delay the Day of Reckoning for as long as possible?


Just a view from where I sit:

To authorize bond sales that would put the state fiscally on the hook requires a 2/3 vote in the legislature to be effective immediately. The Republicans would not "play ball" without more disclosure from the Gov, which he was not willing to give. The Democrats finally passed a bond authorization on a straight party-line vote, but without a 2/3 vote the law requires bond measures to wait 90 days before becoming effective. By the time the state can even sell the bonds, the deficit will likely become so large that it will overwhelm the bond amount. The Legislative Analyst was quoted last week as saying the bond measure would likely be $3 to $4 billion short (or was it $5 bil? hey, whatever) and we would have to sell short term bonds (supposedly at even higher rates) to make up the difference.

Meanwhile the Republicans are holding "secret" meetings with Enron and likely Rep candidates for the next governor election, and trying to make it all look like the Democrats' fault. The Democrats are investigating the energy companies (Enron, Reliant, et al) for naughty business with prices. Neither party is saying anything about amending or demolishing the faulty deregulation law that helped get us into this fix.

Just more political gamesmanship, from both sides of the aisle. The politicos fiddle while Calif burns.

-- Margaret J (, May 29, 2001.

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