The measure includes an indefinite extension of a 90-day emergency rate increase that lifted residential rates by 9 percent and adds another penny to every utility bill. This will make it possible for Pacific Gas and Electric (PG&E) and Southern California Edison (SoCal) to recoup $12 billion they owe to various companies they buy wholesale energy from. The companies are on the verge of bankruptcy, caught in a price squeeze between the rising cost of natural gas and other energy sources they purchase and what they can charge customers.

The state will also issue bonds totaling billions of dollars to enter into long-term contracts to purchase power. Seeing a good deal, a total of 39 companies put in bids to sell the state electricity at an average of $69 a megawatt hour, well above the $55 cap California Gov. Gray Davis said he was seeking. The state will resell the power to PG&E and SoCal at prices that guarantee the companies a solid profit.

President George Bush used the crisis to push ahead, with bipartisan support, a 10-year, $7.1 billion "energy policy." The measures will benefit corporations involved in oil and gas exploration by offering them tax incentives, relaxation of environmental restrictions, and opening of wildlife areas for exploitation, including the Arctic National Wildlife Refuge. Bush said he was considering issuing waivers on air pollution restrictions to "allow older plants to come on stream." Vice president Richard Cheney, formerly chief executive officer of the oil services Halliburton Company, is to head up a task force to push forward these plans.

The Alaska wildlife refuge is home to the Gwich'in people, the most northerly Native American population. Their way of life is completely dependent on the Porcupine caribou. Exploration and drilling, spokespeople for the native population say, would cut the number of caribou on which they rely for food, clothing, and tools. "It still takes an act of Congress to open up the Arctic," Donna Carroll, of the Gwich'in steering committee, told the press. "We believe that the majority of the people want the refuge preserved," she said. The Canadian government has also expressed its opposition to development of the area, which shares a border between the two countries.

As a "stage three" power alert was in effect for the 14th consecutive day, the Bush administration increased the pressure on the California state government when it announced an executive order requiring utilities in neighboring states to sell California excess power would not be renewed February 7. The New York Times reported that top officials of Credit Suisse First Boston, Citigroup, and Goldman Sachs, among others were in extensive discussion with California legislators to finalize the bailout in order to prevent the two utilities from going bankrupt and insure the $12 billion owed by them is paid.

A representative for State Assembly speaker Robert Hertzberg said he "felt all along that it is critical that we find a long-term solution that works in the financial world, so we sought counsel from people within the business." The Utility Reform Network issued a statement calling the deal a "complete bailout of the utility companies. Not surprisingly, the bill gives the financial markets exactly what they have been lobbying for--assurances that California consumers will pick up the entire tab for the state's failed deregulation experiment."

Government officials are also encouraging conservation, pushing to get working people to accept the idea that they would pay more and do with less. For example, the California Independent System Operator (Cal-ISO), the agency in charge of the state's electricity grid, urged people to huddle together to watch the Super Bowl game on television. Cal-ISO warned of the possibility of an increase in electrical demand when millions of people turn on TV sets to watch the football game. "I'm not trying to be facetious," said Cal-ISO's chief operating officer of the suggestion.

According to an Associated Press report, "Forecasters predict natural gas prices will remain high for the next 18 months to two years, until new sources come on line. That could mean little if any relief until late 2002." Some energy experts predict the real crunch is six months away, when air-conditioning usage can eat up over 10,000 megawatts more than is currently consumed. In addition, large power companies, such as the Bonneville Power Authority, are announcing large rate increases. Long a source of cheap electricity from hydroelectric dams in the Pacific Northwest, Bonneville Power said it plans a 60 percent price increase over the coming years.

Falling stock prices at the two utility companies are taking a toll on workers' pensions. At PG&E, most workers have invested in the company's 401(k) retirement plan. Some workers have reported losing between $80,000 and $100,000 as the amount of money in the plan declines along with the value of the stock.  
 
Energy monopolies record profits
At the same time, three of the main suppliers of natural gas to California--Enron Corp., Dynegy Inc., and Duke Energy--have reported big profits for the last quarter of 2000. Enron reported a 34 percent increase, from $259 million a year ago to $347 million. The world's biggest energy trader, Enron saw its total revenues triple, from $11 billion to $41 billion. Dynegy also reported windfall profits for the same time period.

And the surge in prices for natural gas and oil also resulted in big profits to the oil industry as well. Texaco Inc., Chevron Corp., and ExxonMobil Corp. all reported gains exceeding Wall Street's expectations. Net income at ExxonMobil more than doubled in the last quarter, from $2.28 billion to $5.22 billion. Texaco reported fourth quarter profits of $545 million, up from $318 million a year ago. And San Francisco–based Chevron reported that its last quarter profits had also increased, from $809 million last year to $1.49 billion, an 88 per cent increase. "Another strong operating performance in the fourth-quarter capped the most profitable year in our company's history," bragged Chevron CEO David O'Reilly.

Capitalists in all sectors of the energy industry are profiting handsomely from the social disaster of the energy crisis, which affects working people the most. The Los Angeles Times reported that at least part of the $10 billion windfall raked in by PG&E and Edison in the early stages of deregulation was paid out to shareholders, bondholders, and their respective parent corporations. PG&E Corp. and Edison International, the "parents" of the two utilities, have shielded their assets from their utility's red ink, a practice known as "ring-fencing." As long as the money transfers were not hidden from federal regulators, this practice is not illegal. In the third-quarter of 2000, PG&E Corp.'s earnings jumped from $185 million a year earlier to $225 million.

Bob Keller works in a meat-processing plant in the Bay area.  
 
 
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