"As a free-market economist it is difficult to recant and utter these sentiments. I do so because I do not see true competition in the market and because our market-surveillance economic experts assert market manipulation must exist to cause these unprecedented prices. I am deeply troubled by the lack of power. This commission has to go after the culprits in this scenario which, through their collusion, are bringing the utilities to the brink of insolvency and the reliability of the electric system to the edge, at great cost to consumers. To paraphrase Adam Smith, never do men of the same trade get together when they do not do harm to the public. It must be stopped. Those generators making windfall profits at present have no incentive to curb their behavior. After long reflection, I must conclude that the surest way out of this dilemma is for the legislature to immediately establish a California Power Authority to set the rules of the game and to have the power of condemnation at fair market value over all state generation. Calls for behavior modification have not worked. Action must be taken."

     "There is a much simpler, better way to develop renewable energy... the American wind industry's lobbying for tax credits goes in exactly the wrong direction. What we need is something simple and direct, an arrangement like they have in Denmark and Germany. And we'll only get it if we ask for it.

     "We need an 'electricity feed law' like that of Germany: a Public Utility Regulatory Policy Act (PURPA) for the new millennium. The German electricity feed law says, like PURPA, that you have the right to connect to the grid and sell power. Unlike PURPA, the German law spells out what you get paid: 90% of the utility's retail rate. No endless meetings, no paper shuffling, no lawyers! It's as simple as that.

     "Net metering won't do it. Every state that has net metering limits it to either solar or small-scale wind generation. In Germany, there's no limit on the size of your wind turbine. You use what makes the most economic sense. That's the way it should be.

     "I'm for taking a radical step, adopting an electricity feed law. The electricity feed law in Germany is startingly simple, it's only two paragraphs. Let the lawyers, utility apologists, greenwashing con-artists, and beltway bandits getting fat on deregulation and tax credits designed for only rich corporations stew in their own juices!

     "This is a controversial stand. The wind industry says I'm being unrealistic, we're Americans, and it doesn't fit within our political and economic environment. I disagree. It fits with a Jeffersonian vision of the kind of America we want."

     ". . . Distributed photovoltaic generation, with its relatively strong correlation with peak loads, (JBS Energy, 1996) could be particularly important in this regard. This finding that conservation not only benefits the conserver but everyone else should become the cornerstone of a new public goods imperative and the associated rate design policy."

     [California's Governor Gray Davis] could start by taking Bilas's courageous advice and condemning the state's generators. While a fair price is being determined, he should push for a law that reregulates the generators by requiring them to file tariffs and sell their electricity at a reasonable price -- cost plus a fixed profit, not the 34.4¢ per kilowatt-hour recorded in December's PG&E bills for electricity that costs 3¢ or 4¢ to produce.

     He should then go on to take the following steps:

     "If more people built solar, there would be no need for any more electric plants or transmission lines. We could do away with all that expensive infrastructure. I think people are waking up to the fact that buying electricity from the grid is like renting. After 20 years you end up owning nothing."

     "To this day, public ownership means lower rates and better service. This January a typical PG&E residential customer will pay $59.40 for 500 kilowatt-hours of electricity, compared to $36.89 for a Sacramento Municipal Utility District (SMUD) customer. Average electric bills in San Diego for 500 kilowatt-hours almost tripled under deregulation, from $51.60 in August 1999 to $138.50 in August 2000. By comparison, bills of the Los Angeles Department of Water and Power (LADWP) have stayed stable at just over $50 for the same months, and they remain stable to this day.

     "The poverty of political and intellectual discourse in California is demonstrated by the fact that even now, eight months into the present crisis, caused by a ruthless cartel's exorbitant demands and engineered 'shortages,' the issue of public ownership and democratic governance is only beginning to be taken seriously by state policy makers. Public power is not a respectable object of university inquiry, even in the much touted energy programs at UC Berkeley, where the topic has been totally ignored, as Upton Sinclair first pointed out in his 1923 book The Goose-Step: A Study in American Education. All we have is talk about 'market signals' and 'appropriate pricing mechanisms' from our professors. Harvard and MIT are identical in this regard. Is it conceivable that utility influence over our magnificent universities is the reason?

     Within our regulatory bodies, nobody has been minding the store for years. Two consecutive antigovernment and antiregulation governors have left public service in a shambles, which Davis is trying, in small ways, to reverse. The CPUC, despite its 'mission ... to assure consumer access to universal, reasonably-priced, safe, reliable, and environmentally sound public utility service while contributing to the economic prosperity of California,' keeps no records on rates of such public power entities as SMUD, LADWP, and Roseville. When asked why not, commission functionaries invariably reply, 'We don't regulate public power.'"

     Q: Is PG&E really broke?

     A: No, not by a long shot. The division of the company that delivers electricity is running a deficit of more than $6 billion, according to the Wall Street Journal. But the parent company, PG&E Corp., in late October 2000 reported a 22 percent jump in profits from the third quarter of 1999.

     PG&E Corp. currently has assets of nearly $34 billion (see "PG&E's Other Pocket"). On Feb. 12 PG&E got permission from federal regulators to protect the parent company from having to pay off the debts of its electricity-sales subsidiary. It's a corporate-law shell game, though: the money's there.

     "Pacific Gas & Electric Company claims it needs a bailout by California taxpayers to avoid bankruptcy. But we're hardly talking about a company that's down to its last dollar.

     "The utility's parent company, PG&E Corporation, has revenues of at least $21 billion and total assets of nearly $34 billion, according to Securities and Exchange Commission reports. The utility insists it cannot use the money from its parent (PG&E Corp.) to pay its debts, arguing that the state's deregulation bill requires the corporation to keep the assets and debts of its subsidiaries separate from one another -- but consumer advocates disagree, saying that the law simply prevents the parent company from using the utility to subsidize itself, not the other way around."

     "California, the nation's most populous state, has become the poster child for electric utility deregulation gone bad. A 1996 state deregulation plan which was supposed to make electricity cheaper has resulted in vastly higher energy costs for consumers and businesses. California residents and businesses paid nearly 11 billion dollars more for electricity last summer than the previous year. The state now faces the possibility of power shortages manipulated for price maximization. This possible manipulation was pointed out by the California Public Utility Commission last summer.

     "Even California's current Democratic governor, Gray Davis, who has tiptoed cautiously into the controversy, calls the state's deregulation "a colossal and dangerous failure." But, now the big question is how the mess is to be cleaned up and, more important, who pays: consumers or the big utilities which promoted the deregulation scheme in the mid 1990s?...

     "Consumers should not be coerced into a monstrous bailout as this electric drama unravels in California. It will be interesting to see who stands up for the consumers against the utilities in California. California has an opportunity to set an example for the nation: an example which establishes clearly that consumers should not be required to pay for failed deregulation schemes, corporate mistakes, and greed. Citizens in other areas of the nation should realize that their states are not immune from the type of deregulation disasters that have befallen California."

     "...in a growing number of communities around California, the energy crisis has given new life to the venerable idea of publicly owned electricity systems. It makes perfect sense: at a time when private price-gouging and a lack of conservation programs are crippling the state, public power agencies are thriving, with low rates, reliable supplies -- and efficient, effective programs for renewable energy and conservation."

     "Everyone from President George W. Bush and Gov. Gray Davis on down concedes deregulation's failure, but so far the state has merely offered a corporate bailout. It's a solution that critics say is short-term and skirts the real issue: the need for a community-based approach to energy policy. But you won't hear any real discussion of this idea in the mainstream press, where rescuing Pacific Gas and Electric and Southern California Edison from bankruptcy is portrayed as the state's top policy priority.

     "Call it a political blackout: press and politicians are largely ignoring the one solution proved to work -- public power."

     "The Sierra Club has long advocated for modernizing or replacing older power plants with newer ones. New power plants are up to 50% more efficient and up to 90% cleaner than older ones. Utilities and power producers on the other hand, have resisted building new plants over the last ten years because, until recently, demand did not force them to do so and because the utilities knew that deregulation would force them to sell off plants.
     "In the last three years, a number of proposed power plants have been slowed by objections from competing energy companies."

     "The current war over electricity is a war over the future of California.

     "The Confederate Cartel of Southern, Enron, and Reliant is holding California for ransom and looting it dry. There's no doubt Pacific Gas and Electric will try again to push through a huge percentage rate increase - larger than the 10 percent (on average) granted by the California Public Utilities Commission this week. And the bounty will go to holding companies in Texas and the Carolinas, giving them more cash to buy out PG&E Corp. and Edison International.

     "Attorney Jason Zeller, testifying for the normally mild-mannered Office of Ratepayer Advocates, told the commission on December 29 that 'this enormous transfer of wealth ...[is]... the kind of thing that nations have gone to war over.'"