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California’s Assault on Energy Producers By: Chris Weinkopf
FrontPageMagazine.com | Tuesday, April 24, 2001


It's his description of choice for the private power generators that are charging California top dollar to keep the lights on. The bastards, he told one reporter, are "screwing us to the wall." At a press conference, he announced the solution is for Sacramento to "terrorize the bastards" by seizing their power plants.

If he were governor, he said, he "would have taken them yesterday."

The actual governor, Gray Davis, is more subtle in his attacks. He's only called the generators "marauders," "pirates" and "the biggest snakes on the planet Earth." And while he's also threatened to use eminent domain to confiscate private property, he's so far had the good sense not to follow through with it.

But with public criticism mounting over the state energy crisis, Democrats in Sacramento are sounding ever more like Bolsheviks. They cast all blame on the power-generating capitalist running dogs and promise a brighter future when the government fully controls the means of production.

Lt. Gov. Cruz Bustamante has called for empowering the state to put energy executives in jail.

Attorney General Bill Lockyer has offered a $50 million bounty to any whistle-blower who can unearth their crimes.

Treasurer Phil Angelides has suggested that if generators "don't take their foot off our throat," the state should "seize a plant or two to sober them up."

The purge is on.

While a little demagoguery is to be expected from politicians fearing for their political lives, overheated rhetoric can have unintended consequences. Attached to draconian policies, it can be downright destructive.

Californians have less to fear from energy producers than from some of the ideas currently circulating in Sacramento, such as property or contract seizures, taxing "windfall profits" and wholesale-price freezes. The state's Democratic leaders have resurrected every failed and discredited economic policy of the past century.

At this rate, the lights will be out for a long, long time.

If generators have engaged in price-fixing or collusion, as some have alleged, then they have committed real crimes that can and should be prosecuted. But such charges have mostly gone unproved, and for good reason: In the current economy, generators can amass gigantic profits without breaking the law.

That might strike Sacramento as unfair, but it's the way markets work. When supply is low and demand is high, prices will climb. Anyone who has recently sold a house in the Southland's overheated real estate market knows how lucrative this kind of situation can be.

The problem in California is not that businesses are acting like businesses, but that government bungling has perpetuated the supply-demand imbalance that a free market would have corrected. Overly burdensome environmental policies have kept new power plants from being built, and fixed retail rates have given consumers no reason to conserve.

Revolutionary rhetoric won't improve the situation.

Few electric companies are likely to spend millions building new generators in a state where they fear their profits will be capped or double-taxed, or that their assets could be confiscated. Talk of seizing property and freezing wholesale prices will also deter existing suppliers from making necessary upgrades or increasing production.

For power prices to go down, power supplies must first go up. Vilifying and threatening generators might help take the public scrutiny off the politicians, but it will drive away the investment the state desperately needs.

The greater danger, however, is if power populists actually mean what they say and Davis starts confiscating plants. Then the government that so badly botched deregulation would be in charge of keeping the power flowing throughout the state.

Ratepayers could expect the efficiency and fine service they're accustomed to receiving from the DMV and the California Franchise Tax Board. Taxpayers would pay dearly for the seized plants, many of which are old and in need of expensive repairs.

That's the utopia the Sacramento Bolsheviks have to offer. The state would control the means of production, but the people would long for the good old days when the "bastards" still called the shots.


Chris Weinkopf is an editorial writer and columnist for the Los Angeles Daily News. To read his weekly Daily News column, click here. E-mail him at chris.weinkopf@dailynews.com.


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