California Democratic senator Dianne Feinstein, who closely collaborates with Gov. Gray Davis on the crisis, told the press more rate increases and some form of bailout of the companies must be carried out. "That's the fact, and you have to prepare people for the facts," she said. "There is no politically painless solution. The more you get into this the more clearly you see it."

President George Bush proposed relaxing environmental rules that he claims keep the state's power plants from running full tilt. He dismissed the idea of imposing price caps on energy rates, instead telling CNN, "If there's any environmental regulations that's preventing California from having a 100 percent max output at their plants--as I understand there may be--then we need to relax those regulations."

Enrique Alemán, in a line with 200 other workers applying for union construction electrician apprenticeships January 20, said he thought the "corporations predominate over the people. We consumers don't get the break in electrical rates that big corporations get. We get hurt the most. There is no crisis of energy. The cause is that corrupt corporations want more money out of the lowest income class."

Michael Pulsoni had a different take on the crisis, saying it was the "hallmark of incompetence. No attempt to increase resources. Part of the problem is environmental restrictions."

Fifteen minutes after talking with Alemán and Pulsoni, the lights went out.

The energy crisis is having an impact on dairy farmers who were already facing dropping milk prices and increasing costs. The Modesto Bee reported that dairy farmers have had to dump fresh milk in wastewater ponds since mid-December. When creameries and other businesses that process milk are slowed or closed due to power outages, trucks carrying milk from the farmers get backed up, forcing farmers to dispose of the highly perishable product. The Land O' Lakes processing plant in Tulare has dumped 450,000 pounds so far.

Developments over the past week highlight the depth of the crisis.

• $400 million in state funds were allocated by the California legislature and Governor Davis January 19 to purchase energy for the two utilities, Pacific Gas & Electric (PG&E) and Southern California Edison. This stopgap measure will last no more than a week at current wholesale prices. The state could burn through more than $5 billion in three months, said Roger Johnson, chief electricity market strategist for the California Department of Water Resources, the agency designated to buy the power.
• Both Southern California Edison and PG&E continue to edge toward declaring bankruptcy. If they do so, it would be the largest and third largest bankruptcy cases in U.S. history, involving a combined $20 billion in debt.
• Standard & Poor's and Moody's Investors Service downgraded the two utilities bonds to junk status. Edison has defaulted on $600 million in debts so far. Following the $400 million state bailout, Standard & Poor placed the debt of California's state government on "credit watch."
• PG&E Corp. won federal government approval to change its corporate structure in order to insulate the bulk of its assets from the credit problems of its utility--PG&E Co. While PG&E's utility ran up a multibillion dollar deficit in recent months, the parent company continues to rake in substantial profits, increasing by 26 percent in the third quarter of last year alone.

Nearly half of PG&E's debt is owed to itself because the parent company sold energy at a substantial profit to it's own subsidiary. With the looming bankruptcy of the utility portion of PG&E's operations, they convinced the Federal Energy Regulatory Commission on December 28 to approve a stock transfer plan that shields the assets of the parent company from it's insolvent utility subsidiary.

• Shortages of gasoline, diesel, and jet fuel are possible as power interruptions shut down pipelines. Inventories are low, leading industry officials to predict even higher prices at the pump. Airline companies have expressed worries that fuel shortages could lead to major schedule disruptions. The normal six-day reserve of jet fuel at the San Francisco International Airport was down to just two days on January 18, Ron Wilson, a spokesman for the airport said.
• On January 18, deliveries of natural gas to PG&E power plants were stopped by two of its largest suppliers until they get paid in cash. The next day a third supplier followed suit, forcing the utility to draw heavily on its reserve fields at a rate that could deplete it within weeks. Natural gas fuels many of PG&E's power plants.
• In addition to layoffs of 1,000 of its 17,000 employees, 80 percent of PG&E's workers own company stock which has lost two-thirds of its value in recent months. Hard-earned retirement funds and savings are tied up in stock that has gone from $28 two months ago to $10.19 on January 19, its lowest point in 20 years.

Bernie Senter is a member of United Food and Commercial Workers Local 120.
 
 
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