What Happens if the Utilities Go Bankrupt?
* All of this talk about Southern California Edison and PG&E; possibly facing bankruptcy is viewed as a catastrophe for Californians. I don’t see how that can be.
What will happen if these two utilities enter bankruptcy? As I view it, they will be given a breathing spell from their creditors and, barring an adequate financial resolution with these lenders, will eventually be forced to turn over their assets to them--just as you or I would be required to do should we face similar financial hardships.
These lenders will either run the utilities themselves or sell them to companies in the business of power generation and distribution. The only differences that may occur are that Edison International Field will be renamed and dozens of highly paid but inept corporate managers who thought they would “make a killing” from deregulation will, rightfully, lose their jobs. The power lines still will have to be maintained, bills will have to be sent out and meters will have to be read, so the rank-and-file employees of the companies will maintain their status quo.
What this fear of bankruptcy is all about is the desire to maintain the dozen or so cushy jobs of the company executives, who want the ratepayers--instead of the shareholders--to bail them out of their miscalculation.
KEITH ENCAPERA
Huntington Beach
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* I laugh all the way to the bank as I think of the alleged consumer advocates attacking the utilities who are victims, not the cause, of our crisis.
One cause is high oil and gas prices. The solution requires production of more fuel and/or development of alternative sources of power. A short-term fix could be oil and gas price control, which will reduce the incentive to drill and keep the price up in the long run. We need a state and national energy policy that will increase oil and gas production.
Another cause is lack of sufficient capacity to generate the needed electricity. Edison used only private funds for its Edison, Florence, Huntington and Shaver Lake generation projects. Los Angeles took part of Edison’s distribution system and gets power from the Hoover Dam at less than adequate return on the taxpayers’ investment.
Generators are not a good investment because of the unfriendly atmosphere, particularly in California, including the prospect of regulation, taxes, safety and environmental regulations. Vice President Al Gore’s frequent jabs at big business did not help the atmosphere.
We will never know if deregulation of the utilities would have worked if the price of fuel and demand for electricity had not risen so dramatically and generation capacity had increased.
ROY B. WOOLSEY
Newport Beach
