Public, not corporations, should own power, crisis shows

  Shirin Vossoughi Vossoughi is a
third-year history and American literature and culture student.
Feel free to speak your mind and e-mail her at [email protected].
Click Here for more articles by Shirin Vossoughi

Everyone run, duck or take cover. On your way out, can you turn
off the lights? In case you haven’t opened a single newspaper
or turned on the TV (maybe you are trying to conserve electricity),
California has been experiencing an “Energy
Crisis.”

So what does this mean? Many people have been led to think that
California has somehow drastically increased its energy use this
year, leading to a shortage and our current crisis. Just last week,
front-page news told us that “Californians’ plugged-in
ways highlight the crisis” and that “our homes are
drawing more and more power even as local state and federal
agencies forever hone rules to increase efficient use of
resources” (Los Angeles Times, Feb. 11, 2001).

What they fail to tell you is that it is these agencies and
corporations that profit daily from charging us exorbitant prices
for energy and which have really caused this so-called crisis. To
avoid further disasters, basic necessities like electricity must be
permanently taken out of corporate hands.

Of course, it is always important to try and conserve energy.
But the real disaster in California is failed deregulation and
companies that are unwilling to take responsibility for their
mistakes. There is no reason why we shouldn’t have
affordable, reliable electricity and no reason why we as consumers
should have to pay for a crisis we did not create.

While our friend the mainstream media would have us believe that
energy use has skyrocketed and everyone should run out and buy a
new, energy-efficient refrigerator (CNN actually recommended that),
the truth is that power demand during four of the past six months
was lower than during the same period in 1999. According to Public
Citizen, a consumer advocate group in Washington, D.C., this
indicates that California’s power producers are
misrepresenting the facts about energy needs in order to justify
gouging the state’s utilities or improperly inflating the
amount they are charging utility buyers for power on the wholesale
market.

  Illustration by ZACH LOPEZ/Daily Bruin

What they really need to justify is why California deregulated
in the first place. Deregulation, implemented in 1996 under AB 1890
by the California Assembly, aimed to allow market forces to
determine energy prices, while promising to lower consumer costs
and protect the environment.

Since then, this experiment in free market economics has
resulted in swelling wholesale electricity prices, a boost in
profits for power producers and the potential shutoff of
California’s power. The utilities, specifically Pacific Gas
& Electric and Southern California Edison, claim they
don’t have the dough to buy power because it now sits in the
hand of large corporations, resulting in high wholesale prices.
Yet, corporations, whose goal it is to make profit, should never
have power over basic necessities like energy.

Just how do they try to make profit? Firstly, through price
discrimination ““ charging different customers (small vs.
large businesses) different prices, resulting in less consumer
power for the small guys. Secondly, suppliers merge with their
competitors, creating monopolies. While monopolies should never be
tolerated, those that have formed under deregulation drive up rates
with no limits.

So if the financial problems California faces are due to these
corporations monopolizing the market and driving up prices, why
don’t they simply pay? A large piece of the “energy
crisis” involves the utilities’ bankruptcy claim, which
absolves them from the responsibility of paying for their
mistakes.

But in fact, utilities are far from bankrupt. The parent
companies of several providers have spent billions on buying other
assets in recent months. Two California utilities, PG&E and
SCE, are owned by PG&E corp. and Edison International. If such
monopolies benefit corporations under deregulation, they must be
held accountable when the subsidiaries they profited from need
help.

While the utilities claim bankruptcy, their parent companies
have gone shopping, spending over $22 billion on power plants,
stock buybacks and other purchases that far exceed their supposed
$12 billion debt from California operations. The companies have
been “playing a shell game,” pulling money out of the
state through their California utilities and using it to invest in
other states and countries (www.citizen.org). We must demand that
they sell off these assets to pay their bills so that the state
(i.e., we the taxpayers) won’t have to.

Considering that we constantly hear about Gov. Gray Davis and
energy specialists scrambling to fix the crisis, what have they
come up with? Under the governor’s proposal, the steps to
recovery include maximizing generation at existing plants,
accelerating the construction of plants, streamlining the permit
process for all plants, and expanding renewable energy supplies and
distributed generation.

At a recent press conference, Gov. Davis said, “We are
moving heaven and earth to make sure that megawatts are on line
this summer ““ every individual has to do everything they can
to conserve power and to be a full partner in allowing us to build
more power to meet our energy needs” (www.governor.ca.gov). Too bad it
wasn’t every citizen, but a few individuals, who caused this
crisis in the first place.

In rushing to build new plants, environmental regulations will
be bent to speed up construction. Executive orders D-24-01 and
D-25-01 lower air quality standards and allow contracting exempt
from Government Code and Public Contract Code. I guess
“moving heaven and earth” might not be the best idea.
As if hurting the environment wasn’t enough, Davis has
proposed taking all that’s left in the Department of Parks
and Recreation budget to help construct new plants (Exec. Order
D-27-01). Surely PG&E and Edison shouldn’t foot the bill
““ better to take it from the little money we have for parks
and playgrounds.

While the governor proposes new power plants and stresses energy
conservation, PG&E scrambles to avoid state regulation and
claims, “The risks of electricity investments can be managed
by the private sector, where profit and loss incentives will
minimize electricity costs for California” (www.pge.com).

Apparently, they haven’t been paying attention to the fact
that electricity costs have actually been maximized the past few
months due to the very same private sector. Already, consumers in
California will see a 19 percent increase in their energy rates
while corporations rest easy.

And don’t think good old President Dubya doesn’t
have his hands dirty in California’s mess. Bush is buddies
with Kenneth L. Lay, chairman of Houston-based Enron corp., a giant
energy-marketing firm. Bush repeatedly refuses to intervene more
aggressively in California’s electricity crisis ““ while
Enron and its subsidiaries have profited handsomely from soaring
energy prices (Los Angeles Times, Feb. 11, 2001). Lay gave $500,000
to Bush’s campaign, landing himself a spot at lunch in the
White House the same day Bush was playing down the need for a
federal role in California’s energy crisis. Hmmm.

Despite Bush’s irresponsible lack of concern and
PG&E’s push for more deregulation, California should
re-regulate and take back authority over the power companies
instead of bailing them out with money from our pockets, hurting
the environment and taking from public funds.

As Harvey Rosenfield of the Foundation for Taxpayer and Consumer
Rights told the Los Angeles Times on Friday, “Giving $2
billion that could have gone to build schools, housing, highways
and help lower taxes for consumers is a moral outrage.” In
addition to regulation, we as consumers should demand utility
ownership. Through municipal utilities, which are nonprofit, owned
and controlled by their customers, we can take back control over
energy prices and keep them low. It’s our right.