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The Whistleblower

The Whistleblower #21 - Apr 26, 2002

The California Puppet Utility Commission. The Public Utilities Commission is supposed to be an independent body, but clearly California Governor Davis plays Geppetto to the Commission's Pinocchio. According to the Sacramento Bee, on several occasions last Monday commissioners halted their closed-session discussions of Davis' energy contract negotiations to telephone the governor's office. The repeated calls to the Gov. suggest that the regulators are either unable to function independently, or they failed to respect their constitutionally-derived mandate to do so. Although Commissioners Wood and Lynch appear to have opposed making the calls, the PUC ultimately voted unanimously to suspend legal actions against the power companies that renegotiated the contracts. That decision killed consumers' hope for holding those price gougers accountable for their role in the energy crisis. And if the commissioners deny this, watch for their noses to grow.

Did U.S. legislators learn from Enron? If the U.S. Senate were a classroom, then the Senators would have failed this test. Taking nothing from their months-long lesson on the Enron disaster, in which the company overextended itself by exploiting consumers in deregulated markets, and then self-imploded, U.S. senators yesterday approved an outrageous Energy Package. The bill would further deregulate the electricity industry, making the national energy markets fertile ground for the growth of future Enrons. That is apparently senators' intent, as they repeatedly defeated amendments that would have mitigated some of the bill's anti-consumer deregulation provisions. Two weeks ago, the Senate killed two such amendments: one would have regulated the complex energy and commodity trades that enabled Enron to manipulate markets with impunity, and the other would have eliminated the bill's electricity deregulation component. Senators on Wednesday defeated another amendment, introduced by Sen. Cantwell (D-WA); it represented a last-ditch effort to include consumer protections in the Senate energy bill. The amendment would have required that utility mergers meet public interest criteria, and that the Federal Energy Regulatory Commission prevent market manipulation and ensure that electricity sales meet just and reasonable price standards. The amendment would also have required that utilities' books be fully open to scrutiny. But, as Enron taught senators, if we could review power companies' books before a scandal, then there might not be all that financial calamity and the TV time for lawmakers that comes with it.

How about California's politicians? Do they get it? Despite California's electricity deregulation failure, there's another deregulation fiasco-in-the-works. AB2958, by Assemblyman Rod Wright, would force consumers to pay $3 billion in excess charges to deregulated monopoly telephone companies by freezing in place the state's failed experiment with local telephone deregulation. Verizon and Pacific Bell bilked customers out of refunds before deregulation, then reaped monopoly profits during the experiment, according to the state's Office of Ratepayer Advocates. Now that it's clear the experiment needs to be scrapped, Wright has stepped in--backed by Verizon and Pacific Bell--to prolong the current deregulated environment and prevent regulators from re-introducing consumer protections for five years. With the electricity deregulation debacle so fresh, you'd think that another deregulation bill would be dead on arrival in Sacramento. Yes, you'd think that, but you would be wrong: the bill passed unanimously in its first committee.

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