Note: I read with some interest the posts regarding the CPUC and PG&E in Friday’s online AVA. Your post was spot-on pin-pointing the bi-partisan collaboration between Republicans and Democrats in fostering the collapse of electrical regulation that resulted in the CPUC’s neutering from Watchdog to Lapdog.
PG&E and the state’s other electrical monopolies are able to operate with a public-be-damned attitude because of this state’s fatal blunder deregulating the electrical industry back in 1996. The real culprits are the politicians who brought us deregulation. The entire state legislature (Republicans and Democrats) voted unanimously to unleash economic havoc on an unsuspecting public. Those elected leaders, colossal imbeciles each and every one, are responsible for the deregulation fiasco.
Here in Mendocino County back in 1996 most local governments, including the then-Board of Supervisors (John Pinches, Patti Campbell, Mike Delbar, Richard Shoemaker, and Charles Peterson), also went on record unanimously supporting electrical deregulation. The BOS was paid a visit by a PG&E exec who was the monopoly’s point man on the Northcoast. He was also Patti Campbell’s husband, Peter. He was a very amiable, charming Englishman, PBS/BBC-style, and the day he made his deregulation pitch to the Board, he succeeded in gaining their support by charming the monkeys right of their trees for what turned out to be one of the state’s most prodigious fubars. Yours truly opposed the whole hornswoggle, obviously I charmed no one.
Over the past 25 years, I’ve written probably 80 to a 100 hundred pieces on numerous facets of this abysmal story. Back in 2001, I wrote a column that I think is a fair summary of a very long, sometimes treacherous saga leading up to the much justified recall of an indecisive and ethically-spent Governor — Gray Davis. And then things got real interesting, real fast.
Anyway, here’s a look back at something that’s still happening…
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(January 8, 2001)
Calling Virginia Strom-Martin.
Calling Wes Chesbro.
Calling Mike Thompson.
Calling Dianne Feinstein.
Calling Barbara Boxer.
Please answer your pager. Please call home. You have a message. A very important message. California is in a crisis. Your constituents are getting screwed. Our state’s economy is about to crash.
We can’t hear you.
We can’t see you.
Where are you?
Most likely our stellar legislative delegation has been abducted by aliens. They are nowhere to be found. What else could explain the mysterious disappearance of our distinguished posse of swivel-chair legislators.
Still think deregulation is such a great idea?
Obviously, our elected leaders think California’s failed experiment with utility deregulation is just what the doctor ordered — Dr. Kevorkian, that is.
I’ll bet that bunch of so-called public servants can’t even spell PG&E.
Well, since none of them have the guts to face the music about the deregulation fiasco, here’s the tune they’ve all been whistling.
Back in the mid-90s I warned you that the imbeciles in Sacramento were planning to deregulate the state’s energy utilities. All of the jackasses were braying about all the wonderful things deregulation would do for the public. I told you not to believe them. I told you that every experiment with once-regulated industries has been a disaster: airline, railroad, telephone, savings and loans, and the list goes on.
Truly great leaders like Teddy Roosevelt, a grand old Republican, figured out a century ago that certain sectors of our economy must be monitored and regulated because the typical forces of the free market could not control the resulting anti-competitive, monopolistic behavior inherent to such economic endeavors. Teddy used his big stick to bust the trusts, which is what folks called monopolies back then. He also brought the monopolies under their first public control.
While Teddy (who along with his cousin Franklin Roosevelt, George Washington and Abe Lincoln are this country’s four greatest presidents) was bringing the monopolists to heel back East, California Populists led by Republican Governor Hiram Johnson, in the early 1900s were rounding up Southern Pacific Railroad and the gas and electric utilities which owned state and local government lock-stock-and-barrel. An aroused citizenry brought the railroad and utility giants to their knees, primarily through the creation of public commissions with broad regulatory authority over those industries.
For almost a hundred years, California’s utilities policy was pretty straight-forward. In return for allowing PG&E and Southern California Edison to continue to do business as legal monopolies, their rates and services would be subject to control through the Public Utilities Commission. That was the basic trade-off. Theoretically, and most of the time in practice, the PUC set rates charged to the public on a standard of cost-based pricing. Whatever it cost the utilities to actually produce energy was factored into the basic rate, plus a reasonable margin for profit.
A century ago, our political leaders understood that the electric and gas industries were the types of economic endeavors that just didn’t work in the free marketplace. Besides, given the then evolving public investment in critical utility infrastructure, such as dams and related activities for hydroelectric power, it was good public policy to maintain these kinds of private-public partnerships growing out of a regulated environment.
The system was not perfect, but it sure beat the alternative — as we are now learning to our great detriment. As any country boy or girl will tell you, if it ain’t broke don’t fix it. But that’s exactly what our sell-out politicians did back in 1996.
By a unanimous vote in 1996, the entire state legislature voted to kill something that had worked for a century.
By a unanimous vote in 1996, every Republican and every Democrat in Sacramento, decided they knew better than what folks knew — and learned the hard way — a century ago: The utilities have to be controlled by the public because the free market just doesn’t work in certain situations. You might say Californians back in the 1900s “had been there, done that.” They fixed it the first time because it was broke. A hundred years later, an arrogant gang of political hacks broke it because the fix was in.
With the passage of electrical deregulation, California proudly led the nation in efforts to deregulate the electricity sector. The act was hailed as a “historic reform” that would reward consumers with lower prices, reinvigorate California’s then-flagging economy, and provide a model for other states.
Now five years later, the “reforms” lay in ruins, overwhelmed by electricity shortages and skyrocketing prices for wholesale power. The electrical giants now find themselves on the precipice of insolvency just half a step from outright bankruptcy. The state of California became the buyer of last resort, draining the general fund and committing itself to spending $42 billion more on long-term power deals that stretch over the next ten years. And you don’t need me to tell you who’s actually on the hook for that I.O.U.
That’s the long and short of it. You can complain all you want about backroom deals between and among, the politicians, the utilities, out-of-state energy corporations, lobbyists, and the fat cats. It’s all true. They hatched the plot. They passed the money around. They cut the deal. They wrote the law that screwed each and every one of us.
And they’ll keep it up as long as you let them. They’ll keep it up as long as you don’t hold them accountable. They’ll keep it up as long as you keep re-electing them. They’ll keep breaking you until you decide to fix them. Keep that in mind when you pay your next PG&E bill.
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