Saving Money With Smoke and Mirrors

Californians have a chance not only to do themselves a lasting favor on Tuesday, they can also defeat a particularly outrageous piece of corporate piracy before it ends up costing the nation more than the $220-billion taxpayer-financed S&L; bailout a few years ago. The utilities and their allies are pulling out all the stops and spending $45 million to beat Proposition 9 because it thwarts a long-meditated conspiracy whereby utilities across the nation would be able to dump the price for all their past blunders on the backs of their customers and the taxpayers.

Appropriately enough, an early consummation of this piece of corporate knavery came at the midnight witching hour in Sacramento on the last day of the legislative session in 1996. As the day came to a close, the state Assembly hurried through a $28.5-billion gift to the big utilities to pay for both their disastrous nuclear plants and for their old, costly, dirty coal-burning generators. The billions, of course, were scheduled to come out of their customers’ pockets.

Though for all practical purposes utilities would retain their privileges of monopoly and market domination, they claimed that a new era of deregulation was commencing, making available the joys of “consumer choice,” “market based” rates and new opportunities for “green power.”

Nearly a year into this new era, Californians peering at their utility bills see in small print a designation CTC, standing for the so-called Competition Transition Charge, the line item on their utility bills indicating how much they are paying to bail out the big utilities’ past bad investments. The CTC charge amounts to about half the average utility bill in California.

Another line item on the bill is called the TTA, or Trust Transfer Amount, being the interest the consumers are paying to finance the 10% rate “reduction” the state Assembly promised them that dark night in the fall of 1996. The way the utilities avoided paying for this rate “reduction” themselves was to get the Legislature to OK the issue of special bonds to finance the 10% drop in rates. Under this piece of legerdemain, the typical consumer gets a $6-a-month rate “cut” and pays a surcharge of $7 to finance it.

It was no accident of timing that the utilities pushed their bill (drafted by a former lobbyist for Southern California Edison) through at the closing moment of the legislative session. If time had permitted any debate, the bill in the form it became law assuredly would have died.

Now populist resentment has taken the form of Proposition 9, and the utilities have marshaled all their resources for the battle. One can see why. If Proposition 9 passes, all residential consumers and small businesses will enjoy a guaranteed 20% reduction in their utility bills. The utility giants will be prohibited from imposing surcharges that make consumers finance their own rate “reductions.” Proposition 9 also will block the utilities from making their customers pay for the company’s disastrous investments in nuclear power, though it wisely would allow the power companies to recoup investments in alternative and renewable sources of energy.

For environmental cover, the utilities have turned to outfits such as the Natural Resources Defense Council and the Environmental Defense Fund and the Planning and Conservation League, one of California’s largest environmental outfits. Over the past six months, utilities have given this last group $70,000.

Ever since they were given their concessions in the early years of the century, the big utilities have feared populist attacks on their predatory monopolies and have spent huge sums to influence lawmakers, regulatory agencies and so-called consumer advocates. Their war on Proposition 9 has been no exception.

Tuesday will tell whether Californians will thwart one of the most brazen corporate conspiracies on the peoples’ purses in living memory.