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Bigger Than the S&L Bailout: Why Prop 9 Should Pass

Californians have a chance not only to do themselves a lasting favor on November 3, the can also defeat a particularly outrageous piece of corporate piracy before it ends up costing the nation more than the $220 billion taxpayer-financed S&L bail-out a few years ago. The reason the utilities and their allies are pulling all the stops, spending $45 million to beat Proposition 9 is that it would thwart a long-meditated conspiracy whereby utilities across the nation would be able to dump the price for all their past blunders on the backs of their customers and the taxpayers.

Appropriately enough, the consummation of this piece of corporate knavery came at the witching hour, midnight, in Sacramento on the last day of the legislative session in 1996. As September 15 came to a close, the state assembly hurried through a $28.5 billion gift to the big utilities-Southern California Edison, Pacific Gas and Electric and San Diego Gas and Electric-to pay for both their disastrous nuclear plants and for their old, costly, dirty coal burning generators. The billions, of course, were scheduled to come out of the pockets of the customers of those three corporate giants.

This piece of legislation was sold to the public under the usual false labeling. Though for all practical purposes utilities would retain their privileges of monopoly and market domination, they claimed that a new era of deregulation was commencing, making available the joys of "consumer-choice," "market-based" rates and new opportunities for "green power."

Nearly a year into this new era, Californians peering at their utility bills see in small print a designation "CTC," standing for the so-called "Competition Transition Charge," the line item on their utility bills indicating how much they are paying to bail out the big utilities for their bad investments of the past. This same CTC charge amounts to around half the average utility bill in California.

Another line item on the bill is called the "TTA," or "Trust Transfer Amount," being the interest the consumers are paying to finance the 10 percent rate "reduction" the state assembly promised them that dark night in the fall of 1996, as gilding on the utilities' package. The way the utilities avoided paying for this rate "reduction" themselves was to get the legislature to okay the issue of special bonds to finance the 10 percent drop in rates. Under this piece of legerdemain, the typical consumer gets a $6-a-month rate "cut," and pays a surcharge of $7 to pay for it.

It was no accident of timing that the utilities pushed their bill (drafted by a former lobbyist for Southern California Edison) through at the closing moment of the legislative session. If time had permitted any debate in the assembly, the bill in the form it became law would have assuredly died.

Now populist resentment has taken the form of Proposition 9 and the utilities have marshaled all their resources for the battle. One can see why. If Prop 9 passes, all residential consumers and small businesses will enjoy a guaranteed 20 percent reduction in their utility bills. The utility giants will be prohibited from imposing surcharges that make consumers finance their own rate "reductions." Prop 9 will also block the utilities from making their customers pay for the company's disastrous investments in nuclear power, though it would wisely allow the power companies to recoup investments in alternative and renewable sources of energy.

Prop. 9 also mandates truth-in-labeling, requiring energy marketers to disclose the source and price of the power they are selling. This last provision is most certainly needed to protect consumers against claims that they are buying so-called "green power" from virtuous sources such as solar, geothermal and wind. According to a new report by Public Citizen, many of these claims have proved bogus.

The utilities knew they were exposed on two flanks: angry consumers paying bigger bills, and environmental groups furious at the bail-out of the nuclear plants. They sought cover against such attacks . Prominent in the corporate propaganda campaign against Prop 9 is David Horowitz, an erstwhile TV consumer reporter who acknowledges that he's received more than $106,000 in consulting fees from the No On 9 campaign, but tells the San Francisco Bay Guardian that his opposition to Prop 9 has nothing to do with these dispensations. For environmental cover the utilities have turned to outfits such as the Natural Resources Defense Council and the Environmental Defense Fund (which have historically backed deregulation) and the Planning and Conservation League, one of California's largest environmental outfits. Over the last six months, utilities have given to this group, which has been aggressive in its attacks on Prop 9.

Ever since they were given their concessions back in the early years of the century, the big utilities have always feared populist attacks on their predatory monopolies and spent huge sums to influence law-makers, regulatory agencies and public interest groups. Their war on Prop 9 has been no exception. Tuesday will tell whether Californians will thwart one of the most brazen corporate conspiracies on the public purse in living memory.

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