------------------------- Via Workers World News Service Reprinted from the April 5, 2001 issue of Workers World newspaper ------------------------- HUGE PROFIT GRAB POWER MONOPOLIES TELL MILLIONS: "YOUR MONEY OR YOUR LIGHTS!" By Tahnee Stair San Francisco On March 25 the Public Utilities Commission in California dropped a bombshell. It announced that two days later electric and gas rates would increase by 46 percent. Corporations that trade and produce natural gas have pocketed billions in super profits at the expense of consumers over the last 10 months. Power wholesalers like Enron, El Paso and Dynegy sold natural gas to California utilities for $6.2 billion above the usual market rate. This most recent price gouging comes on top of rate hikes of 9 percent and then 13 percent in recent months. On March 22, the Independent System Operator, a non-profit entity of the state that runs the power grid, filed a report with the Federal Energy Regulatory Commission exposing details of the scams. The ISO hoped to recoup some of the state's losses by nullifying agreements between utilities and wholesalers. The ISO report says that wholesalers sold electricity at higher rates than it cost them to produce and withheld power supplies by not even bidding for proposed sales, further driving up costs. The power crisis, more aptly called the power scam, has seriously hurt poor and working people. The inflated cost for power is directly passed on to consumers through skyrocketing power bills. But the workers also are the ultimate source of state funds used to purchase power to meet the state's needs, as well as a pending state bailout of the utilities. California has spent $4.2 billion since January to purchase power for the utility companies. The two largest utilities in California, Pacific Gas & Electric and Southern California Edison, claim they are $13 billion in debt. The utilities are lying, hoping for a bailout by the state. Between 1997 and 1999 the utility company PG&E funneled $4 billion to its parent company, PG&E Corp., for out-of-state ventures. State officials recently said that the state needs to spend $23 billion to buy power by the end of the year. Already, many people cannot afford to pay their bills and have been forced to forego the use of electricity and gas. The ISO has enforced rolling power outages, not seen in California since the World War II era. The situation is especially serious as the hot California summer approaches, bringing greater power demands and dangerous heat waves. A major cause of California's power crisis is electricity deregulation, or "letting the market work." It has worked very well for the electric power generating and distribution industries. Their profits have increased by up to 900 percent on investment, according to none other than California's pro-big business Democratic Gov. Gray Davis. Deregulation was passed by the state legislature in 1996 and signed by then-Republican Gov. Pete Wilson after a heavy lobbying effort by the big utility companies. Deregulation, the utility monopolies and other energy capitalists preached, would give California residents and businesses the "freedom"to select the power company of their choice. Residential and small business electricity rates were frozen for four years at 50 percent above the national average. In exchange, the law stated that once the debts were paid off, the rate freeze would end and consumers would receive a "guaranteed" 20 percent rate reduction. Ratepayers have paid Edison $9.3 billion so far under this "competition tax." As part of deregulation, the big utilities had to begin selling off their generating plants. The plants were purchased by about a dozen power companies, the biggest of which included Enron, Duke Energy, Reliant, Southern Energy and Dynegy. The California utilities used much of the proceeds from these sales to build new generating plants--in other parts of the country. Duke, Enron and the other power-generating companies now sell their power to the Power Exchange, California's centralized electricity market. California utilities, in turn, are required to buy their energy from the Power Exchange. California hospitals have been put on and taken off the power-outage list, only to be put back on and taken off again because, according to an ISO spokesperson on National Public Radio's March 20 California report, "they might encourage other public services to ask for exemptions." Other public institutions include schools, elder homes and public transportation, all of which are deeply affected by this crisis. State Controller Kathleen Connell, complaining that the state's surplus was being drained, blocked the transfer of $5.6 billion into a collateral fund to impress Wall Street as the state gets ready to issue tens of billions of dollars in bonds to support the power buys. The transfer, which will eventually be enforced by law, will leave the state a $2.4 billion debt. Another crisis will hit California and the nation this summer. What are the people going to do? The "Personal Responsibility Act" signed by Clinton in 1996 put a lifetime limit of five years on welfare entitlements. With these new rates, an untold number of poor people will be added to the hundreds of thousands who are being kicked off welfare into the streets with nowhere to turn for food and shelter. WHAT THE STATE COULD DO Through the power of eminent domain, the state of California has the legal right to seize the power plants and run them itself. The state should be spending money preparing for the summer crisis by issuing and funding a moratorium on welfare cuts, creating jobs, providing rent and food subsidies, and insuring power to hospitals and other public centers. Instead it is lining the pockets of the power corporations with outrageous payments. As of March 27, the Federal Energy Regulatory Commission has made no ruling on the ISO's report on this immense scam. The commission has a history of barely regulating the energy market and the report was expected to be dismissed as soon as it was filed. Even the business writer of the New York Times, Paul Krugman, wrote in a March 25 article, "The Federal Energy Regulatory Commission, which is supposed to act as the nations' watchdog over the energy industry, lately seems more like a lapdog." The politicians are in the deep pockets of the corporations. The only public government response to the evidence of the power conglomerates' monopoly and price fixing was a whopping 46 percent rate hike by the state, which is still planning to buy power from them. On the federal level the White House has suggested expanding oil drilling in the Arctic Wildlife Refuge to deal with the problem. Oil drilling in the Arctic Wildlife Refuge would do absolutely nothing to increase the natural gas supply for California or the country, or even decrease the cost of oil. In trying to boost the efforts to drill for oil in the Arctic Wildlife Refuge, one Republican senator went so far as to threaten, "Do we want to fight another war over oil? We fought one once." There is a real solution to this absurd crisis. Energy resources should be publicly owned and used to meet people's needs, not provide profits for a few. Heat and electricity are a right! Join Workers World in the fight demanding: No shutoffs! Roll back the rates! No state bailouts of the corporate profiteers! - END - (Copyright Workers World Service: Everyone is permitted to copy and distribute verbatim copies of this document, but changing it is not allowed. For more information contact Workers World, 55 W. 17 St., NY, NY 10011; via e-mail: [EMAIL PROTECTED] For subscription info send message to: [EMAIL PROTECTED] Web: http://www.workers.org) ------------------ This message is sent to you by Workers World News Service. To subscribe, E-mail to: <[EMAIL PROTECTED]> To unsubscribe, E-mail to: <[EMAIL PROTECTED]> To switch to the DIGEST mode, E-mail to <[EMAIL PROTECTED]> Send administrative queries to <[EMAIL PROTECTED]>
