|
|
Enron Mail |
These are the people to whom Western Power Trading Forum is contributing
funds for a paper on the electricity crisis. Sue Mara Enron Corp. Tel: (415) 782-7802 Fax:(415) 782-7854 Jeff Dasovich Sent by: Jeff Dasovich 07/31/2001 09:33 AM To: skean@enron.com, Richard Shapiro/Enron@EnronXGate, James D Steffes/Enron@EnronXGate, Karen Denne/Enron@EnronXGate, mpalmer@enron.com, Susan J Mara/NA/Enron@ENRON, Paul Kaufman/Enron@EnronXGate, Harry Kingerski/Enron@EnronXGate, Linda Robertson/NA/Enron@ENRON, Susan M Landwehr/Enron@EnronXGate, Janel Guerrero/Enron@EnronXGate cc: Subject: Gouger Gray Davis : California's petulant governor ignores reality as he overpays for electricity Gouger Gray Davis California's petulant governor ignores reality as he overpays for electricity LANCE T. IZUMI Mr. Izumi is a senior fellow in California Studies at the San Francisco- based Pacific Research Institute. On the surface, things seem to be going pretty good for Gov. Gray Davis with regard to California's electricity crisis. The governor has scored some nice publicity by switching on some new power plants. The weather has been unseasonably cool. His poll numbers are edging back up. Yet beneath this optimistic picture lie troubling problems. For example, Davis's argument that out-of-state power generators are responsible for the electricity crisis has been falling apart. For months, Davis has been claiming that private generators have overcharged California by $8.9 billion and demanded that this amount be refunded to the state. However, after a two-week mediation between state officials and the generators, Curtis Wagner, the federal government's chief energy regulatory judge, rebuked Davis's claim saying that such a huge overcharge "has not and cannot be substantiated." Further, while the generators may be liable to refund a much smaller amount to the state, perhaps $1 billion, Wagner said that generators are owed more money by the state than they owe the state in refunds: "Can a cash refund be required where a much larger amount is due the seller? The chief judge thinks not." Davis reacted to the judge's ruling by calling it a "raw deal" and by urging the Federal Energy Regulatory Commission to ignore the lack of evidence and the judge's conclusions and to "step up and provide the refunds we've asked for." Davis's position, as usual, is motivated purely by politics. Indeed, Dan Walters of the Sacramento Bee says that Davis is operating in a "melodramatic virtual world" de-linked from reality. Davis's blame-the-generators argument took another body blow when newly released documents showed that, on average, major out-of-state power companies such as Enron, Duke, Dynergy and Mirant charged less than the average prices paid by the state during the first three months of the year. California government utilities, on the other hand, such as the Los Angeles Department of Water and Power and the Sacramento Municipal Utility District (SMUD), charged the state much more for electricity than the out-of-state generators. For example, while Texas-based Enron, a favorite Davis whipping boy, charged an average $181 per megawatt hour, SMUD charged an average $330 per megawatt hour. Davis responded to this revelation in typical political fashion. A Davis spokesman said that the governor had expressed his anger at "the generators who wear cowboy hats" and that "just because there are other entities that are charging us more doesn't change the fact that we are getting ripped off by companies from Houston, Tulsa, Atlanta or Charlotte." Yet, for all Davis' feigned indignation about consumers being ripped off, it turns out that he and his regulators are poised to ensure that business consumers are ripped off by state government. Davis has signed $43 billion in ill-advised long-term purchase contracts at rates above-market-price. The state must, therefore, ensure that enough business customers remain in the current state-controlled distribution system to pay for high-priced state power purchases. This is especially important to Davis since the high prices are borne disproportionately by business. Thus, Davis' regulators are set to eliminate "direct access," which allows businesses to shop for cheaper power. Who's the real gouger? No matter how much Davis points the finger, Californians are paying dearly for his political opportunism and bad policies.
|