Socialist Action /April 2001
Energy Corporations Reap Profits from
California 'Crisis'
By MICHAEL SCHREIBER
SAN FRANCISCO-"You no longer represent the
public," said Oakland resident Joel Tena during an April 3 protest
at a meeting of the state Public Utilities Commission. "You represent
big business. You are cronies for the corporations."
Tena spoke for many citizens of California, who
feel they are being held hostage by a profit-hungry group of deregulated
suppliers of electric power.
Indeed, the Field Institute found in January that
57 percent of the people it surveyed thought that California's alleged power
shortage was fabricated to jack up energy prices.
The price-fixing energy cartel and their allies
in the state government have already dealt California consumers a deadly
double whammy. First came the rolling blackouts-power cuts often lasting
hours in length that have affected homes, schools, workplaces, and even
hospitals.
A second blow hit just recently, when the Public
Utilities Commission approved an unprecedented electric rate hike by the
utilities, which will average 37 percent for consumers. This is on top of
huge increases in electricity bills that already took effect in January-as
well as skyrocketing prices for natural gas to homes and businesses.
Retail establishments and services have tried,
of course, to pass on part of the hikes in their utility bills to their
customers. For example, washing and drying a load of clothes at our local
laundromat cost $2 just a couple of months ago. It now costs $2.75. But
laundromat owners in the neighborhood claim that they are still losing money,
since their energy bills have as much as tripled in recent months.
Why is energy so scarce in California? After all,
electricity usage this winter was no greater than during the previous winter.
During the current "crisis," as much as 20 percent of electrical-generating
capacity has been mysteriously "out of service," and state officials
have not been able yet to completely account for the missing megawatts.
The San Francisco Chronicle (Jan. 14, 2001) pointed
out, "State regulators are investigating whether power ... generators
are shutting down power plants statewide so that they can privately sell
the high-value, natural gas that runs most of them."
And the Chronicle reported on Jan. 19 that San
Francisco was suing "13 power generators and marketers," claiming
that they had "colluded to fix prices and restrict energy supply."
But actions by governmental bodies against the energy corporations have
been few and far between.
In general, the state government's strategy has
been to prop up the debt-ridden big utilities against their creditors, no
matter what the cost to the taxpayers.
Gov. Davis offered to bail out the utilities by
purchasing their electric transmission lines. He wanted to pay well over
double the assessed value of $3.1 billion for the lines, and then lease
them back to the utilities to operate.
But so far, the largest utility in the state, PG&E,
has stonewalled Davis, putting a $10 billion price tag on its transmission
lines. PG&E recently filed bankruptcy papers, a financial shell game
that allows the company to dump a huge debt on the one hand and allow its
associates to reap huge profits on the other.
Of course, "poor" PG&E Co. is linked
to the well-heeled PG&E Corporation, which is a piratical energy trader
in its own right, wheeling and dealing throughout the country.
In the meantime, the state Department of Water
Resources (DWR) has been empowered by Gov. Davis to buy electric power at
inflated prices from traders across the country, and then sell the power
to utilities like PG&E Co., which distributes it to consumers (who ultimately
foot the bill). Officials estimated that the DWR is shelling out about $350
million a week on the electricity "spot" market, and will exhaust
its funding by July.
The Chronicle comments: "By nearly all accounts,
the luckless bureaucrats at the DWR are being torn to shreds by professional
energy traders, who see in California's power-purchasing plan a golden opportunity
to make off with billions in extra profits."
As Gov. Davis's approval ratings nose-dive, some
politicians have become increasingly shrill on the topic, even calling for
what once was unthinkable-using eminent domain to seize the power generating
plants and place them under state control.
These politicians always dutifully mention, of
course, that the corporations would be "compensated" for their
property later. Yet working people have already compensated the utilities
several times over. No more subsidies! We must demand that PG&E and
the other utilities open their account books, so working people and consumers
can see where their money went.
Some grassroots activists have called for local
or statewide public agencies to oversee the generation and distribution
of electrical power.
But "public" boards are hardly an answer.
Generally, they merely provide a platform for long-winded, pro-capitalist
politicians to maintain the corporate rip-off. Experience shows that any
"radical" proposals that activists might make to such agencies
will merely generate paperwork and countless "studies" that drag
on for years.
We advocate that energy be taken completely out
of the hands of profit-making corporations and placed under the democratic
control of the workers, acting, through their unions, with working-class
consumer committees who represent the victims of price-gouging by the corporations.
Energy is a public resource that should be used
for people's needs, not profit. It requires methods that are low cost, efficient,
and environmentally friendly. All generating plants that burn fossil fuel
or use nuclear fission should be replaced by sustainable methods like solar
or wind power.
These goals will take a powerful struggle to attain.
In this struggle, the active support of organized labor will be key.
Socialist Action /April 2001 |