A federal agency found that, and yet nobody is willing to offer the relief that the law says California is entitled to.
All the information that Wall Street needs, that the treasurer needs, and that the Public Utilities Commission needs, to implement my plan. So we've released everything except the specific terms of the long-term contracts.
As a matter of fact, it reduced rates to customers and froze them for five years. So that was an inherent conflict.
As the governor of this state, I obviously see the issue quite differently.
But still, he's a wily old fellow - he ran the Department of Water and Power, ran the New York Power Authority, and even with no leverage, he was able to cut a pretty good deal. Over a 10-year period, we were able to get prices averaging 6.9 cents.
Can you imagine that? The state of California - they're questioning our credit. These people have no shame. None.
Curt Hebert is the chairman of the commission, but he has not been overly sympathetic to California.
David Freeman believed that was the best deal we could cut with the generators at a time when we had no leverage.
David Freeman, who I hired to negotiate contracts with the energy companies... said it would be very detrimental to release the terms, the specific terms, of a contract, because the next person is not going to offer us a better deal than the contract we just put in the newspaper.
Duke came to us. They volunteered to come to us and made a number of suggestions to some people on my staff. I don't know how I would characterize them, but there have been some discussions going back and forth between Duke and members of my staff.
First of all, I think the entire amount of money owed Duke is in the $100 million range. That may sound like a lot, but given the huge sums of money these people make, it really isn't.
Here is my general approach to the energy companies. You have already charged the utilities a 50 percent credit penalty for the power they were buying from you. You're charging us a penalty. You're not going to get two bites of the apple here.
I am working my tail off to make sure the ratepayers are not on the hook.
I did that on purpose, because I do not want to shock our economy into a recession, and I do not want an outraged citizenry to pass an initiative that would eliminate deregulation.
I don't know if I would do this if I had to start over again.
I don't know why they're doing it. I have to assume that their motives are positive, not negative. But they don't understand the severity of the problem in this state.
I have no idea what Duke promised. But trust me, we will not do anything that is the slightest bit unseemly. We'll not call off any investigations.
I have not been briefed.
I know that Duke made a number of demands, including that the attorney general drop its investigation. We have no intention of asking the attorney general to do that.
I'm determined to do two things - keep the lights on, and keep the rates reasonable. And to do the latter, I have to pursue every avenue available to me to investigate and pursue any claims against the generators for unjust charges.
I'm doing my part, building plants at a record rate, having historic conservation levels. The only people not doing their part is the federal government that is siding with the energy companies against the interests of the people of California.
I'm here to solve a problem. The problem is getting reliable electricity at affordable rates, and I'm going to have essentially a blended solution, which will include the creation of a public power authority that will be the builder of power plants of the last resort.
I'm paying them if they conserve 20 percent, and we are paying them if they put energy-saving devices in their home or their business.
I've only raised rates a very small portion of what the true rates are. We paid 450 percent more in 2000 for power than we did in 1999. Therefore you would need a rate increase of a commensurate nature.
If a stock drops a certain percentage, they cease trading. If the market drives 500 points, they cease trading.
If that initiative were to pass, investment would be withheld, and it would take years and years longer before we had a surplus of power.
It certainly doesn't help if you have to spend 450 times for a loaf of bread or for any other staple of life. Electricity is an essential of life.
Meanwhile, people have to join us and fight back against the federal government that has dropped the ball, that is in bed with these energy companies, that wants them to make more money than they've made before.
Now, in the space of a year, we've spent 450 percent more for power than we did the year before, and bought essentially the same amount of power. This year, that number's likely to go up. That can't go on forever and have us continue to be the economic engine for America.
Once a regulatory agency finds that the market is dysfunctional, which they did last summer, and the rates last summer were unjust and unreasonable, it just should just refund the excess profits. That's what the law requires them to do.
"Problem," meaning fattening the balance sheet of already enormously wealthy energy companies.
So ask yourself, why are we paying these energy companies so much more money for the electrons we bought two years ago for $7 billion?
So it was flawed in that it didn't require California to have a first claim on the power plants. It deregulated part of the market, but not all of the market.
Texas has not even gotten into deregulation. Nevada has stepped back. Several western states have decided they'll just wait. So if they want to jeopardize their entire American market, that's what they're risking by not being part of the solution.
That was a Trojan horse, and that had more holes than a piece of Swiss cheese. All a generator has to do is sell it to a middle person who can sell it to a public power authority, and there's no application to the generator as to what price they can charge.
That we are doing the level best we can to make sure power is available, and to minimize hardship and to call on everyone to conserve to their utmost ability - and to make it financially attractive to them to conserve.
The authority that oversees them - the Federal Energy Regulatory Commission - has said that their rates are unjust and unreasonable. So they found these people guilty a year ago - they just haven't agreed on the sentence.
The generators have made more money than God. I mean, they've made 700 percent, 800 percent, 900 percent profit. They haven't improved the service. They haven't improved the product.
The problem is the price problem, which is entirely in the federal government's jurisdiction. We can't control it, and the federal government has been siding completely with the big energy companies in Texas, and not with the public in California.
There are several states in this country that have stepped back from deregulation, because they see the pain inflicted in California, and they don't want it.
There are so many scenarios here. We tried to prepare for the worst summer in 40 years and build assumptions based on that. We're preparing for the worst, but we're hoping for the best. And I've told people the end is in sight.
There is only one governor, and his name is Gray Davis.
There's no question that California, in the last three or four years, has been privileged to add disproportionately to the economic growth of America, and to contribute to its technological productivity.
These people have made hundreds and hundreds and hundreds of millions of dollars of profit off of California alone.
They did not ask for deregulation. They should not be viewed as the sole source of solving this problem. I don't want them to pay a disproportionate burden.
They're just selling us back our own electrons that are sitting here in California.
They're the Federal Energy Regulatory Commission, and they will not do that. They will not pull the trigger.
We believe you will not have to pay more than the current rate structure proposes - which is, for 50 percent of the public, nothing; for another 25 percent, only a 10 percent increase; and for the remaining 25 percent, a 34 percent increase.
We need a circuit breaker to make sure that the rough edges of deregulation do not work a hardship on any citizen of this state.
We started focusing on this in earnest late summer and early fall. I can build more power plants. In the 12 years before us, not a single plant of major consequence was built.
We'll have a public power authority, which will also have the ability to build power or finance power. And more importantly, we'll have more power than our economy provides. All of that will give us leverage we don't have today.
We're going to march on Washington with a host of Republicans, Democrats, business leaders, legislators.
We're not going to take this sitting down. We are fighting back.
Well, there's no question that the law passed in 1996 was flawed. It deregulated the wholesale market, meaning the price that the utilities had to pay energy companies for power, but not the retail market.
Well, we're trying to patch and fix and put a cast on a broken system here. You can call it what you want, but we'll continue to purchase power in a private market.
What I'm trying to do is protect the 34 million people of this state to make sure they have reliable power at affordable rates.
Why? Because we're very well down this process as it is - flawed as it is - and we're counting on getting more power plants on line by the end of 2003 so we have a surplus of power.
You're going to have to have a very substantial reduction of what you expect to pay us back - otherwise you are jeopardizing the whole future of the deregulation experiment.
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