Unless you've been living in a bubble, you've been bombarded by media coverage of California's energy woes for the past six months. But though there's a lot of press on the issue, the vast majority of it repeats false notions about the problem facing the state (and soon, the nation). Too often, the "crisis" is portrayed as one of electricity shortfalls: simply put, it's said that energy demand in the state surpasses electricity generation capacity.
But in the past month, state investigations and news reports have begun to draw a clearer picture of the machinery of the crisis, and have bolstered critics of the mainstream definition of the crisis. There's now more solid proof that generators have withheld energy - and possibly natural gas - at key times to jack up prices. There's a common understanding that lawmakers - and heavy-handed utility CEOs - created a market tailor-made for profiteering when they signed off on the state deregulation plan five years ago.
What's become nearly irrefutable is that California's is a crisis of greed.
That's the subject of a new investigation by Lowell Bergman, produced jointly by Frontline and the New York Times (Bergman's investigative reporting was made famous in the 1999 film The Insider, about the investigation that knocked big tobacco to its knees.). Billed as "the story behind the energy crisis," the hour-long show takes viewers through a crash course in how Houston, Texas-based energy companies like Enron and Dynegy have pirated billions of dollars from California energy customers. The story names the pirates, shows how they've lied about their role as price-gougers, and how Dick Cheney is helping them get away with it.
Bergman keenly portrays the disregard the Texas companies have for the common electricity user: "We are the good guys - we are on the side of angels," Enron CEO Jeff Skilling tells him. This, as reports surface that the same amount of power that used to go for $40 was sold recently for $3,880. He grills many of the major players, including Gov. Gray Davis, Enron's Kenneth Lay, and Cheney. He unravels some of the background deal-making that has gone on between federal regulators and energy tycoons. And he reveals some new information that furthers the argument that the energy problem has been created in part by a corporate war - fought between the out-of-state generators and California's three big utility monopolies, including San Francisco's PG&E. It's a battle with larger implications: if California re-regulates, other states may follow. The power-brokers lone goal is to save deregulation at any cost. The local story, based on comments from Bergman's sources, is that California's former utility giants come out looking like fools.
But that's where the investigation falls slightly flat. I'm not convinced that PG&E and the other utilities can be absolved of blame because of their lack of political and technological sophistication, as the report implies. Missing from the investigation is the fact that the state's utility monopolies were seated at the table when the deregulation law was written. Edison's CEO is said to have written a good portion of it. And PG&E's leadership probably knew more about what was in the law than most of the lawmakers who hastily passed deregulation in 1996. They asked for the market we have.
Also missing is the fact that those same utilities created spin-off companies that are doing quite well. Because Bergman doesn't get in to the scandal behind PG&E's bankruptcy, he lets the utility come out looking like a victim. He could have mentioned the fact that $4 billion was transferred to PG&E's parent between 1997 and 1999. Or that, in the first years of deregulation, PG&E reaped massive profits when customers paid electricity rates far above the actual cost of power so that PG&E could protect its shareholders from the vagueries of the competitive market to come, and so PG&E could pay off old debts on it's nuclear power plant. Or that PG&E and it's parent company still generate power for the state, and that another arm of PG&E is ripping off New England consumers just like Texans are doing here.
Another missing element: public power. That's probably because Bergman doesn't really get into possible solutions (other than hinting strongly that re-regulation might be a better way to go). And he doesn't look at the parts of the state that have survived the "crisis" just fine: cities like L.A. and Sacramento with public control over energy, where greed is (generally) taken out of the equation. That should be Frontline's next investigation
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