Editorial

SolutionsThe time has come to take bold action to solve California’s power crisis. As the SN&R’s Special Report these past two weeks has demonstrated, our state’s leaders must move now to ensure that power generators can no longer gouge the public and drain the state’s fiscal resources with impunity.

Several proposals now winding their way through the halls of government come together to form a patchwork of judicious and necessary solutions to this crisis. We urge readers and legislators to support the following:

A windfall profits tax: Power generators have been raking in record profits thanks to our crisis. Both Houston-based Enron (George W. Bush’s largest campaign contributor) and Reliant Energy (with headquarters also in Houston and, interestingly, across the street from Enron) turned handsome profits in their last quarterly statements thanks to our energy woes. (Enron posted a 281 percent profit increase last quarter!) Senator Nell Soto has sponsored legislation that would levy an excess profits tax against profiteering at the expense of consumers and also make it easier than ever to form municipal utility districts in California. The tax’s purpose isn’t to rake in money but to make price gouging bad business. The bill should be passed and enacted right away.

End the gouge: Several power plants have been discovered to go strategically “off-line” for unscheduled maintenance in a manner that keeps supply low and prices high. Attorney General Bill Lockyer has launched an anti-trust investigation into this matter and is also looking into whether power generators have violated laws against collusion, price fixing or other unfair business practices. Lockyer is ready to prosecute and we support him absolutely in this pursuit. We urge solons to support AB 67X, sponsored by Assemblyman Dennis Cardoza and others, which would impose felonies on energy generators who gouge the public by arbitrarily increasing rates.

Create a buyer’s cartel: State Treasurer Phil Angelides came up with a “make them an offer they can’t refuse” proposal that’s worthy of a Corleone. He’d like to see California and other Western states get organized and join consumers together in a buyer’s cartel that sets the price it is willing to pay for electricity. Such a cartel would create de-facto wholesale price caps, since President Bush isn’t going to enact them at the federal level. If the generators aren’t willing to sell at the cartel price, Angelides suggests we begin eminent domain proceedings and start seizing power plants. Assembly Resolution 2XX, sponsored by Assembly members Paul Koretz and Fred Keeley, would help create such a cartel.

Don’t fear plant seizures: As Angelides points out, it’s impossible to negotiate when generators say, “Pay us what we want, or we’ll shut off California’s lights.” His solution, and Senate President Pro Tem John Burton’s as well, is to take over some power plants from those who have been caught gouging, perhaps contract with utilities to run them, then throw it to the courts to decide what fair-market price should be paid to the companies for the plants. The seizure idea requires a bit of brinksmanship, but are we not on the brink? And what better way to show that California now means business.

The solutions above require nothing but a little courage and the will to change. California is more than ready to take control of its own energy destiny. Let’s get on with it.