New Times Los Angeles | Feb. 28, 2001
Beneath the breathless cheerleading, there were signs that the anticipated benefits were stacked in favor of the utilities and big industrial users, as opposed to ordinary consumers.
Top: Government regulators forced California utilities to buy expensive power from green energy producers, such as this wind farm near Palm Springs.
Below: In descending order, former Governor Pete Wilson, the "godfather" of deregulation, state Senator Steve Peace, who later disclaimed his role as deregulation's "architect," and state Senator Jim Brulte, a key figure in the debacle.
Greedy out-of-state profiteers make easy targets, but the real villains of California's energy debacle are the ones under the state capitol dome.
By Ron Russell
The setting was a politician's dream. With TV cameras rolling and surrounded by beaming lawmakers and business leaders, then-governor Pete Wilson stood in front of a San Diego high-tech firm in the summer of 1996 to sign a landmark bill that promised to lower electricity rates for all Californians. The state's watershed electricity deregulation law, passed without a single opposition vote in either chamber of the Legislature, seemed to offer something for everyone. Big industrial users of electricity, having long complained about paying too much compared to their brethren in other states, were promised rate relief. Pacific Gas & Electric and the state's two other big investor-owned utility monopolies -- Southern California Edison and San Diego Gas & Electric -- were to be unburdened of billions of dollars in bad investments in nuclear power. Residential customers were promised a 10 percent rate cut for four years or until the utilities could get out from under their debts, whichever came first. And in keeping with the new competition that the law was supposed to engender, residential and small business customers could choose from an array of new power distributors eager to sell them electricity at ever lower prices. In political parlance, deregulation seemed strictly win-win. California was at the forefront of a national movement, and the theory of breaking up its monopolistic energy-delivery system looked appealing. It was supposed to work like this: The big three utilities, which combined serve 27 million customers (although not those in Los Angeles, Sacramento, and a handful of other cities with publicly owned electric utilities), would sell many of their power plants to independent energy generators. A multiplicity of those leaner, meaner generators would produce power more cheaply and efficiently than the monopoly utilities had. The utilities would then buy power from the independents, from one another's nuclear and hydroelectric plants, and from other out-of-state generators hooked up to a multistate power grid, in a new power marketplace called the California Power Exchange.
But beneath the breathless cheerleading, there were signs that the anticipated benefits were stacked in favor of the utilities and big industrial users, as opposed to ordinary consumers. As they rushed to put their official stamp on the deregulatory scheme, the state's lawmakers, Democrat and Republican alike, were awash in campaign contributions from the utilities and other powerful interests with a stake in the outcome. Having bought into the purported logic of deregulation, the lawmakers could stuff their campaign war chests even while crowing to the folks back home about the wonderful thing they had done.
Foremost among them was Wilson. As the political godfather of deregulation, his starring role in this free-market saga was perfectly suited -- not to mention timed -- to distinguish him on the national stage from a pack of fellow Republicans with designs on the White House. First, he assembled leaders from among the utilities and big manufacturers to hammer out a series of backroom deals in the summer of 1995 that set the terms of deregulation -- terms that his appointees to the state Public Utilities Commission, which regulates utilities, later rubber-stamped. Then, by exerting pressure on key legislators, most notably senators Steve Peace (D-El Cajon) and Jim Brulte (R-Rancho Cucamonga), to ensure that the Legislature codified what the PUC had done without much tinkering, Wilson more than anyone became responsible for fashioning the experiment. "It's like a Batman cartoon. There are so many deregulation villains it's impossible to count them all," says Michael Shames, executive director of the Utility Consumers Action Network, a San Diego-based consumer watchdog group. Still, in the final analysis, he says, "Wilson made it happen."
Rarely have so many elected officials marched in lockstep with such disastrous consequences. Four years after one of the most far-reaching pieces of legislation ever to come out of Sacramento rolled through the Legislature in less than three weeks, a Pandora's box has spilled open, threatening to halt the Golden State's economic boom dead in its tracks. What deregulation's boosters never counted on was that out-of-state energy generators might decide not to play the game that the Legislature and the regulators designed for them. Instead of offering the output of their plants to the Power Exchange at slightly more than the cost of generating it, these suppliers have offered to sell only at sky-high prices, or not at all.
They're able to get away with it because, unlike in other states that embarked on deregulation, California's PUC -- after the 1996 law was passed -- forced the investor-owned utilities to sell off their power plants and prohibited them from entering into long-term contracts for energy supplies. The idea was to prevent the utilities from dominating the new market arrangement, but things didn't work out that way. Reduced to obtaining energy from a spot market that critics say a mostly Texas-based cartel of energy companies has been able to manipulate, two of the utilities -- PG&E and Edison -- have been pushed to the brink of bankruptcy. Under the rate freeze that the utilities were eager to accept as part of the scheme to let them recover a combined $28 billion investment in nuclear and alternative energy, the utilities became victims of their own game. That's because, since the out-of-state manipulators began sending wholesale prices through the roof last summer, the utilities have had to pay far more for a kilowatt-hour of electricity than they're able to charge their customers under the frozen rate structure.
Last year, when the Dow Jones Industrial Average fell nearly 5 percent, out-of-state power companies that piled into California's chaotic market saw their profits spiral heavenward. Dynegy Inc., of Houston, which owns three major California power plants, saw its net income triple to more than $500 million. Even a company such as Enron Corp., also of Houston, which owns very little generating capacity in California but has nonetheless profited from the run-up of wholesale prices, reported record profits of $1.3 billion, up 32 percent from the previous year.
Against that backdrop, millions of customers outside L.A., Sacramento, and other communities served by municipal power companies -- which generate their own power and are not affected by deregulation -- have been subjected to rolling blackouts this year. And as the critical summer months approach, and people start cranking up their air conditioners, there is widespread concern that the state's anemic power grid may suffer a meltdown. "People are extremely nervous about the summer," says Mark Baldassare, director of the nonpartisan Public Policy Institute of California, based in Berkeley. "Not just in terms of expense and inconvenience, but what the implications may be for the state's economy." Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., echoes a similar view. "Right now there's a window of opportunity through about July to get the [blackout] problem under control," he says. "Otherwise you're going to see businesses and industries already toying with the idea of picking up and leaving the state start to explore their options."
A slew of polls show that residents and business owners angered by the blackouts aren't buying the explanation of a power shortage that the utilities and power generators are pushing. In fact, Peter Navarro, an associate professor of economics and public policy at UC Irvine, suggests that the utilities and the power cartel have purposely turned the lights out to pressure Wilson's successor, Governor Gray Davis, and the Legislature into yet another utility bailout, something the accused parties vehemently deny. "The power generators have bled the utilities dry. Now it looks like they want to do the same to ratepayers," Navarro says.
Davis, who inherited the mess, has won decent marks from the public for his handling of the crisis thus far, but the full implications of his "rescue plan" announced earlier this month have yet to sink in. What seems certain is that millions of the big three utilities' customers will have to pay at least 19 percent more for their electricity starting next year, and perhaps much more. The state has already moved into the power-purchasing business, buying electricity that the cash-starved utilities can no longer afford, in order to keep the lights on, at a cost to taxpayers that has already surpassed $2 billion. And while the total cost of the complicated rescue package can't yet be determined, on the table in Sacramento are rescue-related bonds that could exceed $20 billion -- an unprecedented sum for state government -- to pay for everything from a state takeover of the utilities' power grid to a partial payment of the $13 billion in new debt the utilities have piled up since last summer, when wholesale prices skyrocketed.
A deregulation plan that was supposed to make electricity cheaper has instead shifted billions of dollars from the utilities and their customers into the pockets of the independent energy companies. But to blame the out-of-state cartel, which has become a favorite pastime of politicians -- including Davis -- is like holding vultures accountable for roadkill. "Deregulation was the biggest public giveaway since the railroads," says Harry Snyder, a longtime lobbyist for Consumers Union, based in San Francisco. "Those responsible for it have no one to blame but themselves." Like some others, he faults the hubris of politicians, undue influence by the utilities and their biggest customers, and a news media that failed to grasp deregulation's meaning, becoming captive to the faulty assumptions of regulators and lawmakers. Sherry Bebitch Jeffe, a senior scholar at USC's School of Policy, Planning and Development, sees the fiasco in a different light. "This entire mess is part of the fallout from the imposition of term limits," she says. "There's no institutional memory among lawmakers. There's an approach to policy that says focus on immediate political gain and defer the economic consequences to the next guy who comes into office after you're out of there." The numbers bear her out. Of the 120 lawmakers in the Legislature, only 30 were around in 1996 to vote for deregulation.
The push for deregulation began in the early '90s, but not -- as one might suspect -- at the urging of California's high-tech industry. The Internet's commercial infrastructure, with its reliance on air-conditioned rooms crammed with servers and routers, was not then the energy-guzzling colossus it has since become. Rather, it was big industrial users, such as cement and steel producers, who agitated for the right to buy electricity directly from providers other than the state's utility monopolies -- and for good reason. At the time, electric rates in California, although cheap by today's standards, were among the nation's highest.
As a pro-business Republican with presidential aspirations, Wilson had surrendered his U.S. Senate seat and was elected governor in 1990 just as the state plunged into severe recession. His first three years in office saw some 750,000 jobs disappear, and his public approval ratings dipped to single digits. Yet Wilson was a natural ally of the manufacturers, having come into office with the goal of reducing government's role in all the industries answerable to the Public Utilities Commission. Amid the layoffs and increasing threats by companies to leave the state unless something was done about electricity prices, Wilson took up the deregulation mantra, nudging his PUC appointees into action.
Deregulation was hardly a novel idea. The federal government had already opened a variety of once-regulated industries -- airlines, telephone companies, and savings and loans -- to greater competition. After Wilson became governor, and with prodding from the feds, the PUC began to look for ways to encourage the development of independent power sources. It ordered the big three utilities to seek bids from companies interested in producing power for them. The response was strong enough -- especially among would-be producers of so-called environmentally friendly electricity -- to convince free-market advocates that there were plenty of companies eager to give the investor-owned utilities a run for their money. However, the utilities, led by Southern California Edison, persuaded federal regulators to cancel the bids, arguing that they were costly and unnecessary.
In 1993, the PUC produced a report that blamed the state's regulatory system for giving the big utilities no incentive to become more efficient. The 200-page document, known as the "yellow book" because of the color of its cover, for the first time suggested deregulation as the solution to the manufacturers' complaints. The next year, with Wilson's encouragement, the PUC went from suggestion to commitment. In a seminal 100-page policy statement that came to be known as the "blue book," it declared its intent to dissolve the old power monopolies and create an open market within two years. It was a giant leap, and as Cal State Fullerton economics professor Robert Michaels recalls, "a bit incredible in that it was all happening beneath the public's radar. For such a momentous step, there was amazingly little press or public focus on what it might mean."
For nearly a century, regulators had set rates and guaranteed an investment return for the utilities' shareholders. The utilities enjoyed a monopoly in exchange for the government's regulating them to make sure their profits weren't exorbitant. After all, it wasn't in the public interest for competing companies to string thousands of miles of duplicate power lines. But the utilities also became bloated under regulation. They had little incentive to trim costs since they could depend on the PUC to let them pass the costs to consumers.
Yet as the push to deregulate gained steam with the publication of the "blue book," California's three utilities were reeling from their enormous investments in nuclear and alternative power -- an estimated $28 billion. Frightened by the nation's dependence on Mideast oil, Congress in 1978 forced utilities to buy electricity from companies willing to produce it with solar panels, windmills, farm waste, or factory steam. But in California, regulators miscalculated how high oil and natural gas prices would go, and priced alternative electricity so high that the state became a magnet for the green energy industry. By 1994, California was home to 80 percent of the nation's wind- and solar-energy sources, and utilities were locked into expensive contracts.
If the utilities' green energy predicament could be laid at the feet of federal mandates, the experiment with nuclear power was a different story. The state's two nuclear power plants, which provide about 20 percent of its electricity, suffered massive cost overruns. PG&E's Diablo Canyon plant near San Luis Obispo was estimated in 1965 to cost $400 million, but ended up costing $5.8 billion. The San Onofre plant near San Clemente, jointly owned by Edison and San Diego Gas & Electric, was budgeted at $1.3 billion but cost $4.3 billion.
The utilities feared they would never recover those investments, known as "stranded costs," in a deregulated environment where they would have to lower rates to compete with companies selling energy from newer, more efficient plants. But sensing that deregulation was inevitable, they set out to shape it. By 1995, Edison was openly campaigning for the PUC to enact a British-style system that it viewed as less threatening than other proposals. Although it included an end to the monopolies, the scheme would still channel wholesale energy purchases through a regulated "pool," similar to a commodities exchange, which would bring buyers and sellers together while stabilizing prices. Big energy consumers didn't like the idea, complaining it would give the utilities too much control over the market. Big users pressed state officials to let them negotiate directly with other suppliers as part of any deregulation plan. PG&E, the largest of the utilities, generally sided with the manufacturers, as did Houston-based Enron and a host of out-of-state suppliers who have since made a killing in California.
In the spring of 1995, Edison and the manufacturers were at such loggerheads -- and the pressure each was bringing to bear in Sacramento so intense -- that deregulation almost foundered just as Wilson was getting ready to run for president. To get things back on track, the governor directed two aides, George Dunn, his chief of staff, and Philip Romero, his chief economist, to convene negotiations with the major parties. "It was analogous to the Arab-Israeli peace talks," recalls Romero, now dean of the business school at the University of Oregon. The participants included lobbyists and lawyers for Edison, the California Large Energy Consumers Association, the California Manufacturers Association, and the Independent Energy Producers Association. Consumer groups weren't invited. Over the spring and summer, these big-money interests -- meeting in hotel conference rooms, the governor's office, and the manufacturers association board room in Sacramento -- determined among themselves what deregulation in California should mean.
As part of the scheme, the utilities would buy and sell their power through a pool, but to placate the manufacturers, all consumers would be free (in theory, at least) to buy from suppliers outside the pool. But the real zinger -- the backroom provision deemed essential to win the utilities' support -- was an agreement that any deregulation plan ensure that the utilities be reimbursed for their "stranded costs." The provision potentially meant $12 billion to Edison alone, whose chief executive officer, John Bryson, was a key figure among the utility players. In December 1995, the PUC -- whose five-member board counted four Wilson appointees -- rubber-stamped the deal. Consumer advocates were outraged, mostly over the idea of bailing out Edison and the others for their nuclear boondoggles. They soon had even more to be angry about.
Although elated with the PUC's decision, the behind-the-scenes players Wilson had brought together weren't satisfied. As an appointive body whose members are chosen by the governor to serve staggered six-year terms, the PUC's decisions are subject to revision, not only by the Legislature and the courts but by the commission itself. The utilities and industrial users, who had written their own ticket, wanted their gains locked in by law, not subject to bureaucratic whim. Critics of deregulation say that, at the same time, lawmakers' willingness to get into the act was fueled by campaign contributions flowing from a host of powerful interests, including the utilities, big business, oil companies, and organized labor. "[Legislators] knew they couldn't get any contributions if the PUC decided the issue," says Snyder, the Consumers Union lobbyist.
The job of championing the bill to codify the PUC's actions fell to then-assemblyman and current state Senator Jim Brulte, the bill's official sponsor. But it was Peace, a Democrat from the San Diego suburbs, who was responsible for shepherding it through a legislative conference committee. His role earned him the tag "architect of deregulation," a title he has since pointedly disavowed.
As chairman of the Senate Energy Committee, Peace had established a reputation for being bright, brash, and a pit bull when it came to tackling difficult issues. As a young filmmaker, before entering politics, he had cowritten, produced, and co-starred in the 1978 low-budget cult flick, Attack of the Killer Tomatoes. But as the deregulation bill began sailing through the Legislature, politicos began referring to the then-43-year-old senator's iron-fisted control of the hearings as the "Steve Peace Death March." One lawmaker referred to it as "consensus by exhaustion." During 18 days in August 1996, he ramrodded more than 140 hours of hearings that often stretched from early morning to past midnight. He became notorious for his caustic style, including a penchant for banishing contentious parties from the hearing room with orders to settle their differences or not come back.
Snyder calls the crafting of the deregulation law "the most undemocratic process for any bill that has ever gone through the Assembly and Senate." Waiving numerous rules, lawmakers initiated the bill, officially designated AB 1890, in a conference committee composed of three members from each chamber, whose role ordinarily is to smooth out differences between competing versions of bills that the Assembly and the Senate have already debated. But astonishingly, for such an important piece of legislation, rank-and-file lawmakers relied heavily on just six of their colleagues, and many didn't even become familiar with the particulars of the bill until it was time to vote.
Navarro, the UC Irvine professor, likens the process to "a snowball moving downhill." Nothing could slow it down, not even questions raised within the Wilson administration itself. For instance, a 23-page analysis by the state Department of General Services questioned the bailout of the utilities' nuclear investments. "Is it really appropriate," the report asked, for utilities and their shareholders to "bear no burden whatsoever for poor decisions in the past?" Yet the report, which also raised other questions, recommended approval, saying the bill was an improvement on the PUC's original plan. As a sop to consumers, the legislation included a rollback of electricity rates by 10 percent for customers of the big three utilities as well as a rate freeze until March 2002, or until the utilities paid off all their "stranded costs," whichever came first. But the utilities were allowed to float $7 billion in bonds to pay for the rate rollback -- bonds that those same customers are paying for over a 10-year period. Critics say that since rates were frozen at artificially high levels, and bonds were used to finance the "cut," the actual price break was closer to 3 percent.
Neither was it a proud moment for most of the consumer, environmental, and labor advocates who muted their criticism after goodies were doled out to their constituencies. As part of the provisions Peace helped to engineer, environmentalists got $540 million in subsidies for renewable energy. Unions were promised some job protection and $100 million for retraining and severance benefits for any workers laid off. Other pork barrel deals included $200 million in price breaks for individual large consumers, including the Bay Area Rapid Transit District, the University of California, and even chicken farmers in the San Joaquin Valley.
Not surprisingly, presidential campaigner Wilson basked in the glow of the moment. "We've pulled the plug on another outdated monopoly and replaced it with the promise of a new era of competition," he proclaimed upon signing the bill into law. And in an analysis remarkable for having turned out wrong on all counts, he praised what lawmakers had done as "a major step in our efforts to guarantee lower rates, provide consumer choice, and offer reliable service, so no one literally is left in the dark." The big winners, meanwhile, didn't hesitate to show their appreciation. In 1998, the year deregulation took effect, campaign disclosure records show that Peace, Brulte, and Wilson together took in $175,000 in donations from utilities, nearly triple the amount they received in 1996.
Since that euphoric day a lot has happened in ways that few people involved in crafting the law could have imagined. Things didn't begin going haywire until last spring, when San Diego Gas & Electric's 3 million customers became unwitting guinea pigs for the out-of-state cartel.
As part of the PUC mandate to divest its nonnuclear and nonhydroelectric power plants, SDG&E in 1998 put its half-century-old gas-fired plant in Carlsbad and 18 combustion turbines scattered around San Diego County on the block. A partnership of Dynegy and Minneapolis-based NRG Energy snapped them up. SDG&E's earnings from the sale were so much higher than expected that its $2 billion in debt was quickly wiped out, triggering an end to the rate freeze for its customers. At the end of April 1998, many of those customers were paying 2.7 cents for a kilowatt-hour of electricity. By mid July, after the summer's first big heat wave, the price rocketed to 52 cents.
The great wholesale price squeeze had begun. SDG&E customers screamed bloody murder, and the Legislature, in what critics say was the politically expedient way out, responded with a Band-Aid, reimposing price caps. Again unable to pass along its wildly escalating wholesale costs to consumers, SDG&E sank deeper into the financial abyss. And as many of the plants newly acquired by the out-of-state firms went offline for "maintenance," and demand overtook supply on the Power Exchange, PG&E and Edison also began to hemorrhage. When the utilities' financial condition became so dire that the same out-of-state suppliers balked at selling electricity to them for fear of not being paid, the Clinton administration invoked an arcane wartime statute to force the independents to keep the electricity flowing. But the new Bush administration quickly signaled it would no longer do so, essentially telling the utilities -- and Sacramento -- that California is on its own.
Meanwhile, in the state capital, there's a new crowd of legislators into which those who were around in 1996 can attempt to blend, and a new, if belated, effort led by Davis to clean up the mess. Oddly, Davis may end up as the politician with the most to lose, considering the whole thing was dumped in his lap. The knock on him, aside from whatever the fallout from his rescue plan proves to be, is that he has been too cautious and waited too long to respond. Sherry Bebitch Jeffe, the USC scholar and a veteran political observer, finds the criticism ironic. "This is a politician who's always embraced caution," she says. "During the [gubernatorial] campaign he even joked about it: how it had taken him 24 years to move 15 yards down the hall to the governor's office. Why should anyone be surprised now?"
Wilson lost his voice just when his presidential bid started to take off, and still hasn't gotten it back -- at least when it comes to talking about deregulation. Now the managing director of Pacific Capital Group, a Beverly Hills investment firm, he rarely grants interviews and made no exception for SF Weekly. However, earlier this month he told the San Diego Union-Tribune, his old hometown newspaper, that he deserved credit, not criticism, for deregulation. "Do I regret having pushed for deregulation and signing the bill? No. Quite the contrary," he said. He blames federal regulators and his own PUC appointees for the disastrous results.
If that sounds like revisionist history, it pales compared to the line advanced by Peace these days. He not only insists that he wasn't deregulation's architect, but that he never liked the idea. And in what one pundit dubbed the "Attack of the Killer Myths," the filmmaker turned politician has even produced a 12-minute, documentary-style video to make his case. The video, viewable on Peace's Senate Web site, decries the notion that the Legislature is to blame, pointing the finger at the PUC, Wilson, and Congress. In seeking to "set the record straight," a narrator describes Peace as "a reluctant participant" who played the role of "amender" to improve what came out of the PUC. "Senator Peace did the best he could with the hand he was dealt," says John Rozsa, an energy consultant close to Peace and a longtime Senate staffer. If nothing else, Peace may be remembered as the first political casualty of the energy debacle. He was widely expected to be a candidate for secretary of state in 2002, when term limits require him to leave the Senate. But last month Peace announced he would not run. Sources say that after commissioning a poll to assess the damage from his association with AB 1890, the senator decided that he would be fighting an uphill battle. "Even though he feels he's been misunderstood, he concluded it wasn't worth the hassle," says a staffer who requested anonymity.
By contrast, Brulte qualifies as the big survivor, at least so far. A leader of the Republicans in the state Senate and a close California advisor to President George W. Bush, he has somehow escaped serious scrutiny for his role as the bill's official author. One reason could be that, unlike Peace, a Democrat in staunchly Republican San Diego County, where the local press has been merciless in its denunciation, Brulte enjoys a safe seat in a conservative Inland Empire district. He has even enjoyed warm relations with Davis, who has consulted with him while seeking bipartisan support for his rescue plan. Like Peace, Brulte declined to be interviewed for this article. But back in 1996 he wasn't shy in the limelight. "This is a bill that I think will go down in the history books as one of the most far-reaching and forward-thinking pieces of legislation," he proclaimed then. A Brulte staffer did supply SF Weeklywith a three-page "history" of the deregulation law that he said represented his boss' sentiments. Its succinct conclusion: "AB 1890 didn't bring about restructuring, the PUC decision did."
If there's a surprise wrinkle in Brulte's version of events, it may be his willingness to dis' fellow Republican Wilson. As with Peace, Brulte loyalists insist that their man, and indeed the Legislature itself, had little wiggle room in drafting the law, because the former governor was breathing down their necks not to change what the PUC had approved. To press the point, each office produced a copy of a letter Wilson sent to federal regulators in July 1996, a month before the bill was churned out. "For the past six years, I have made my opinion already known to each of my appointees to the [PUC] and the California Energy Commission that California can no longer abide ever increasing costs in our electric infrastructure," Wilson wrote. "I will necessarily oppose any legislation which seeks to alter the [PUC's] basic framework or time line."
While it's too early to know what the ultimate price tag for deregulation will be for the utilities' customers and the rest of California taxpayers, the early returns in the business-as-usual department aren't encouraging.
Wall Street banks with big financial stakes in deregulation are already playing an important behind-the-scenes role as the second bailout of the utilities in four years takes shape. Goldman Sachs, which has a long-standing relationship with PG&E, appears poised to become the state's financial advisor on electricity. This is the same investment behemoth that owns a natural gas subsidiary, J. Arons & Co., that would become a significant creditor if the utility were forced to file for bankruptcy. Robert Rubin, the former U.S. Treasury secretary who is now a top executive at Citigroup, is also advising Davis on strategies for dealing with the energy crisis. Citigroup's Salomon Smith Barney unit has been a frequent advisor in deals between utilities and power companies. So has another big corporate player, Credit Suisse First Boston, which was retained by Assembly Speaker Bob Hertzberg (D-Van Nuys) to help draw up legislation intended, in part, to make sure the out-of-state power generators are paid what they're owed by the utilities. Among Credit Suisse's clients are Enron, Dynegy, and North Carolina-based Duke Energy. "The statehouse has become Wall Street West," says Jamie Court, executive director of the Santa Monica-based Foundation for Taxpayer & Consumer Rights.
The group's founder, Harvey Rosenfield, has labeled the Davis rescue plan a "bailout," and in what may be the opening salvo of a consumer backlash, is talking about a ballot initiative in 2002. Stay tuned.