State Could Own All Power Plants for the $2 Billion Paid to Profiteers Since Mid-January
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NEWS RELEASE
Feb 14, 2001


CONTACT: Joe Newlin (310) 392-0522 ext. 306

State Could Own All Power Plants for the $2 Billion Paid to Profiteers Since Mid-January

-- Deregulation Colossal Economic Idiocy --
For the $2,000,000,000 of taxpayer money spent since mid-January to buy electricity, California ratepayers could have purchased all of the plants that the utilities sold to the private companies now gouging us.

According to state data, California's three private utility companies sold powerplants valued at $1.7 billion which produce approximately 20,000 megawatts of electricity. $1.7 billion is slightly less than the amount of taxpayer money that has been authorized for procurement of electricity since mid-January, when utilities stopped paying their power bills and independent energy companies instigated rolling blackouts. The blackouts ended two days later, after the Governor began buying power directly from the energy generators. The utilities ultimately sold the plants for $3.1 billion to eight companies, well above their book value -- but still less than two months' worth of state expenditures at current rates.

"At the prices taxpayers have been forced to pay for electricity since mid-January, we could have bought all of the in-state power plants from the companies that are now gouging us, and sold the electricity at cost, rather than pay the highway-robbery prices that we are being charged today," said FTCR advocate Harvey Rosenfield.

Moral Outrage Demands Response

"Giving $2 billion that could have gone to build schools, housing, highways and help lower taxes for consumers to profiteers is a moral outrage," said FTCR. "As we noted last month, opening the state's treasury to the energy profiteers will only inspire the blackout blackmailers to demand more money, and resist as long as possible negotiating a fair price for long-term contracts. We cannot permit the energy cartel to steal the state's surplus."

The immediate actions FTCR said should be taken include immediately imposing a windfall profits tax on the energy generators, or seizing the plants under emergency eminent domain powers in exchange for payment of fair value. "Unfortunately, our elected representatives apparently do not have the fortitude to take the strong action needed to protect us."

Deregulation An Economic Disaster

Finally, FTCR said the numbers illustrate that deregulation was a catastrophic error: "Permitting the utility companies to sell the power plants that California ratepayers built over the preceding decades was the ultimately folly, an economic disaster pushed upon ratepayers by the greed-driven utility and energy companies and free market ideologues whose idiocy has cost us billions of dollars."
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