At the turn of the last century, railroad robber barons had wrapped
their tentacles around California's government. Through rampant influence
peddling they obtained monopoly control of all rail transportation in the
state and wheedled millions of dollars of taxpayer subsidies.
Californians finally rebelled in 1910, undertaking a thorough
political housecleaning with the election of Governor Hiram Johnson. One of
the first reforms was a new California Railroad Commission to protect the
public against price gouging by the railroad monopoly. The Railroad
Commission quickly evolved into the California Public Utilities Commission
and expanded its duties to protect consumers from similar tactics by
electric utility monopolies.
A century later, the wheel has come full circle. This year,
wholesale electricity prices have fallen 95 percent from their highs while
consumers' electricity rates have skyrocketed 40 percent. Worse, consumers
will now be locked into these outrageously high levels indefinitely. This
ugly state of affairs is the direct result of actions taken by the
California Public Utilities Commission - the one agency specifically
designed to protect consumers - at the behest of California's new robber
barons led by Southern California Edison.
Edison waged a yearlong crusade in the legislature to force consumers to pay for the company's losses in California's failed electricity
market. Edison had largely designed that market, lobbied extensively for its
adoption and made billions of dollars in additional profits until last year,
when it began losing money.
Instead of streamlining its operations and reorganizing its finances in
bankruptcy court, as Pacific Gas and Electric has done, Edison undertook a
massive public relations campaign to convince legislators to stick
ratepayers with a $3 billion tab. When the state Senate stopped its scheme
in the last hour of this year's legislative session, Edison secretly
approached the California Public Utilities Commission.
On October 2nd, the Commission suddenly announced - without a
breath of public comment or warning - that it was unilaterally approving the same
bailout of Edison that the state Senate had refused.
The cost to families and small businesses is staggering. The
average Edison customer will pay $750 more for electricity than necessary
over the next several years, just to fill Edison's coffers. And this is
only the tip of a mountain of premiums facing Californians.
Consumers are locked into paying twice the current market rate for
electricity because of sweetheart contracts negotiated in secrecy by Gov. Davis earlier this year.
And it doesn't stop there. In order to cover the Governor's day-trading
losses, a $12.5 billion bond is awaiting sale that - with interest - will
also be heaped on those same families.
Until this year, Edison's customers could simply say "adios" to
California's new robber baron. Under California law, consumers had the
right to shop around for more reasonably priced power directly from other
generators. NewPower Company, for example, has been advertising in Texas
newspapers recently, promising customers $672 in savings over two years if
they'll switch their accounts from Reliant.
But not in California. Several weeks ago, the right to shop around
for cheaper power was taken away from consumers by the Public Utilities
Commission. Because the consumers' watchdog has a new owner, Edison's
customers have no choice but to buy at Edison's outrageous prices or hook up
their homes to a bicycle generator. (And even then, they would be forced to
pay Edison a "stand-by" charge.)
What has befallen consumers is the same sort of influence peddling
and special interest domination of government that California suffered a
century ago. The safety mechanisms that Hiram Johnson left behind have now
themselves become corrupted, and a new age of government-enforced monopoly
And the sad result is this: many Californians will have no choice but
to pay electricity bills many times higher than neighboring states for many years
to come - with their only escape being to leave or to die. Or, perhaps, to
stand and fight and take back their government as their great grandparents
Senator McClintock represents the 19th Senate district in the California
Legislature. His website is www.senate.ca.gov/mcclintock.
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