No, they have not. The bill was bipartisan, passed both houses by overwhelming margins (not possible if it were a GOP-only bill), and is still in conference committee, where it might still die. The laws remain the same.posted by aaron at 4:02 PM on April 8, 2001
IANAL so I don't know about the specific laws, but I know the Bankruptcy Court judge would have to approve of any such pseudobuyout, and I can't imagine one ever giving such permission. Besides, they wouldn't even have to try something like this. By declaring bankruptcy, the utility will get to erase much of its debt, and its owner - the parent company - will get all the benefits anyway.
A "different company" could be a dummy corporation, or a different division, or the parent company, or blah blah. But it's all a part of the same company. How big a "unit" is the electric utility "unit." I'd imagine pretty darn large, but leave it up to Calif. posters to type in what I believe is the obvious.
What most people don't understand is that this is not some sneaky trick on the part of PG&E. When it comes to industries that have a high potential for getting caught up in legal/regulatory/financial storms - such as power, tobacco, etc - it is standard business procedure to create offshoot companies in order to protect the corporate parent from such attacks. In fact, it's so standard that the executives have a legal responsibility to do so. If they didn't, they would be sued by shareholders for breach of fiduciary responsibility, and the shareholders would win. If you want to argue about the morality of a system that requires such actions, fine, but don't blame PG&E for doing what they were required to do, and what any other publicly-traded company would have also done.
Chalk one up for our lame media, Aaron (the confusion).
No argument here. One of the biggest problems of journalism, especially wire service journalism, is that they expect a reporter to become an instant expert in a given subject (in this case, business administration) the moment he gets an assignment, no matter how little exposure he may have previously had to the topic at hand. That's not possible, of course, so he almost inevitably ends up writing a clueless, surface-level story after his scant few hours of fact-gathering. ("Shoveling profits from subsidiary to parent company? Why, that must be corrupt! What other possible explanation could there be? Duhhhh.") Then the next day he gets assigned something on a completely different subject, and then another, and never even has time to absorb what little he does learn from each piece. Not that it matters, since he'll probably never get another story along the same lines.
So where are all the genuine "free market" afficionados when you need 'em?
Welcome back, johnb! To answer your question: There are certain industries in which it doesn't make economic sense to have a free market. The term for it is "natural monopolies." Most utilities are natural monopolies, including electricity. They have to be regulated in order to prevent the price-gouging of consumers who would have nowhere else to turn.posted by aaron at 11:54 PM on April 8, 2001
« Older Within a year, one authority expects, a judge will... | Free as Air, Free as Water, Fr... Newer »
This thread has been archived and is closed to new comments
Buy a Shirt