Thomas D. Elias: Where are electricity refunds?
Almost five years after the end of the great electricity crisis of 2000-2001, it’s beginning to look like the ousted Gov. Gray Davis was dead right when he claimed Californians had been cheated out of $9 billion by out-of-state generating companies he labeled “buccaneers.”
For with the latest claim settlement of $512 million by Houston-based Reliant Resources, the total given up by generating outfits now exceeds $6 billion, with several lawsuits and claims still pending. And that doesn’t even include judgments and ongoing lawsuits against natural gas suppliers, many of whom also stole money from this state’s residents and businesses.
The obvious question: where has all the settlement money gone?
One thing has been certain throughout this winter and early spring of vastly increased electric and gas bills: the settlements surely have not been paid to consumers or small businesses.
One reason is that little of the amounts won by state Atty. Gen. Bill Lockyer or forced by the Federal Energy Regulatory Commission have come in cash. About half the total has been in the form of renegotiated long-term power contracts or cancellation of past debts owed to the generators by big utilities like Southern California Edison and Pacific Gas & Electric.
When Lockyer and FERC say the money might help lower future energy bills or lessen future rate increases, that comes as cold comfort to most consumers when they open their elevated monthly bills.
Then there’s about $1.8 billion in IOU’s from bankrupt power sellers like Enron Corp., where collecting the debt soon doesn’t seem very likely.
And there’s the ever-reluctant FERC, which refused for more than a year during the crisis to place a price cap on sales of energy between states – a move that ended the crisis the moment FERC finally did it 18 months into the crunch.
FERC’s inaction enabled companies like Enron and Reliant to engage in market manipulation schemes like the one which Enron traders called “rebound,” where they would ship power from California plants out of state, then sell it back to California utilities. That allowed them to evade the price limits written into the state’s electric deregulation plan, as there was no lid on interstate prices until FERC finally imposed one.
FERC’s self-imposed rules also stymie any attempt by California consumers to collect refunds from publicly owned utilities accused of price gouging in selling surplus electricity to the state or its big private utilities.
FERC says it can’t order an estimated $1 billion in refunds from agencies like the Los Angeles Department of Water & Power or the federal Bonneville Power Agency in the Pacific Northwest, no matter what they did during the crunch.
The federal commission also says it can’t order another $1 billion or so in refunds for electricity sold before October 2000 because commissioners had never put companies on notice they might eventually order refunds. This is about as logical as a judge telling a proven robber he can’t be forced to return stolen goods because he wasn’t warned of that possibility before the holdup.
FERC, in short, holds that thievery by power agencies is just fine unless they are warned in advance they might be punished for it.
Further FERC logic maintains it can’t order yet another $1 billion in potential refunds for overpricing of power bought at the height of the crisis by the California Department of Water Resources because its October 2000 announcement that companies might have to make amends did not mention the DWR purchases.
This, of course, is like a judge telling a thief he might have to repay some victims, but precluding restitution to other victims just because the judge didn’t know about those thefts.
All of which means the Federal Energy Regulatory Commission is as much the enemy of California consumers and businesses today at it was six years ago, when it first refused to act.
Because commission members are appointed by a president who has never shown much interest in assisting California in any way, and confirmed by a Congress which steadily manifests an “anywhere but California” bias, there is little hope of refunds or settlements ever reaching the $9 billion that was originally stolen.
For sure, something serious is wrong with a system that allows settlements which produce no cash refunds and no real restitution for consumers who did pay cash when they were being robbed.
And there’s just as much wrong with officials like Lockyer and Gov. Arnold Schwarzenegger who utter not a word of protest as all this goes on, yet insist continually they have the best interests of Californians at heart.
Thomas D. Elias is a syndicated columnist whose work appears in The Union. Contact him at firstname.lastname@example.org via e-mail.
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