Here are two articles (1) (2) that explain the whole mess quite clearly.
If you want to see how true deregulation works, look at Pennsylvania. They did it correctly, and everyone there is happy.
posted by aaron at 3:28 PM on January 11, 2001
Aaron forgets to mention the cogent fact that Pacific Gas & Electric cowrote the legislation that deregulated power in CA.
Unless they wrote every word of the "deregulation" bill and the Legislature passed it as-is, this is completely irrelevant. Usually, big companies that will be directly affected by massive changes in state laws get to sit around the table and have their say. That's SOP for any industry/state government relationship. What PG&E did was called "go along to get along;" they got as much out of the bill as they could, and the liberals in the state legislature held firm on what they wanted in return. Thus, the half-deregulation, half-reregulation. (And then both sides went out and put a positive PR spin on it for their mutual benefit? Quelle suprise!) Oh, BTW, with all this talk about how PG&E did all this evil, I must ask: What about the other two big power companies in California? PG&E wrote the law for them too? They just sat back and let PG&E control their destiny? Or is it perhaps that the author picked and chose her attacks, since SFBG readers don't want to get worked up about anyone but their own local "enemy"?
More recently, PG&E's corporate owners have been making out like bandits whilst crying poverty and begging for rate increases.
Making out like bandits? Bull. Yes, they made money in the past. Unless all that money was kept on hand, it's irrelevant now. And the money wasn't kept on hand. Until last week, PG&E paid out a quite nice dividend to its shareholders. All the rest was invested in other things. In other words, it's gone. That's the way the financial world works. Not that it would have mattered that much if they had kept much of that money; see below.
Crying poverty and begging for rate increases? Well, yeah. Take a look at wholesale energy prices out there, combined with the legislated rate cap. In case you haven't noticed, PG&E alone is borrowing one million dollars per hour in order to buy power. That would have eaten up any leftover profits pretty quickly. Which it has, of course; that's why they're borrowing. And that's why they're about to go bankrupt. For real. The parent company, not just the utility. S&P doesn't put companies on Creditwatch as part of some silly little game to screw consumers and get state governments to agree to rate hikes. This is a publicly-traded company, with shareholders ranging from little old ladies who relied on the dividend income, to, yes, wonderful liberal projects such as public school teachers' pension plans. They're all suffering a lot because of this. Even the evil PG&E execs, who have most of their wealth tied up in PG&E stock (which is tanking), and who will be making $0 per year if the company goes out of business.
And we're not even beginning to get into all the other contributors to this mess, such as government and environmentalist refusal to allow new power plants to be constructed, consumer refusal to cut back on energy consumption, etc. (The latter, of course, is largely due to - what else - the state's cap on rates. They don't see any increase in their rates, and yet the lights are still on, so obviously this means the crisis has been manufactured purely to screw consumers.)
(using instead currently inexpensive natural gas)
False. Natural gas prices out there have gone through the roof as well.
posted by aaron at 3:05 PM on January 14, 2001
« Older Scientists insert a jellyfish gene into a rhesus m... | From our No Matter How It Read... Newer »
This thread has been archived and is closed to new comments
posted by solistrato at 2:07 PM on January 11, 2001