News Release

Behind the California Blackouts


Founding director of Global Exchange and spokesperson for the Campaign for Public Power Now, a new coalition of consumer, community and environmental groups, Benjamin said today: “Dozens of municipalities throughout the state, including Los Angeles and Sacramento, have no power crisis because they publicly own and control their power systems…. Governor Gray Davis should use the power of eminent domain to take over the generation, transmission and distribution of electricity. Politicians should give back the money their campaigns got from the utility industry and fight for the interests of consumers, not grossly mismanaged utility companies.”
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Senior researcher at Public Citizen, Slocum said today: “What we’re seeing in California is price manipulation by the handful of power producers who exert total market control over the wholesale market. This manipulation is clear: The amount utilities paid for wholesale power in November and December 2000 exceeded by 28 percent the amount the utilities paid for wholesale power during all 12 months of 1999…. The seven biggest unregulated energy companies operating in California posted $4.6 billion in after-tax profit since the May 2000 price spikes — a 57 percent increase from the same period in ’99…. George W. Bush has said that the crisis is a state, not a federal, issue. He couldn’t be more wrong. The federal government, through the Federal Energy Regulatory Commission, has the authority to set cost-based rates on California power producers.”
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Author of the just-released book The Last Energy War: The Battle Over Utility Deregulation, Wasserman said today: “California’s dereg disaster took root in 1996, when the state’s three dominant utilities banded together to force on the ratepayers what they expected to be ‘the largest corporate rip-off in American business history,’ as Ralph Nader has put it. Some consumer and environmental groups were furious over a wide range of issues, most notably bailouts of utilities’ nuclear reactors. So in 1998, a broad coalition put a repeal on the ballot. Initial polls showed them winning repeal by wide margins. Then the utilities spent more than $40 million, calling in their chits with labor, ethnic and other organizations around the state. The repeal went down, 70-30.”
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Palast is founder of Public Utilities Reform Group (UK) and author of Democratic Regulation. Britain has been the model for electric deregulation. Palast is also a columnist for the British newspaper the Observer. He said today: “The California blackouts are a simple case of greed run amuck, predictable and predicted. The big winners in this monstrosity are Enron — the largest career contributor to George W. Bush — and other energy companies who have strangled the market. ‘Deregulation’ is a lie — it is simply moving regulation from democratic government agencies to an unelected circle of market manipulators.”
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For more information, contact at the Institute for Public Accuracy:
Sam Husseini, (202) 347-0020; David Zupan, (541) 484-9167