A Powerful Memory

There was plenty of glum news this week as the state Public Utilities Commission voted for a $5.7-billion power rate hike, which will raise most household bills by anywhere from a few dollars to more than $70, depending on consumption. The state’s credit rating took another plunge, and the general fund could run out of cash within a few months unless a state bond sale is successful. The economy is on the decline, pushed by the energy crisis. And a business group predicted that California will face up to 260 hours of rolling blackouts this summer, which translates to several hours a day, though not all in the same places.

The whole state is hurting. Californians, even those whose electricity supply is safe because they live in municipal power districts, have a right to be angry. The question is, whom should they be angry at? Usually it’s the utilities.

This time, however, Pacific Gas & Electric is in bankruptcy and Southern California Edison is stone-cold broke. The state now is buying the power, to the tune of $7.2 billion and climbing, and the utilities mostly handle the paperwork. There are a couple of other juicy targets, however:

* Power generators, who are reaping astonishing profits with pricing that is completely unrelated to the cost of producing the power.

* The federal government, which alone has authority to control wholesale prices but refuses to do so.

Even with the rate hikes approved by regulators this week, California state government is still sheltering consumers from skyrocketing wholesale power costs. The cost of power statewide was $7 billion in 1999 and will be an estimated $70 billion this year. In last week’s hot spell, California paid as much as $2,000 per megawatt-hour, compared with an average of $30 a year ago.

Despite the evidence of its own eyes, the Bush administration continues to insist that imposing even a temporary cap on prices would send the wrong message to the power market.

And what message would that be? That full-out greed and market manipulation are better than a fair price with a substantial profit? Tell that to voters. They won’t soon forget this mess, especially if Washington keeps fiddling while California is done in by profiteers and drags the rest of the country into full-out recession.