Luck Be a Lady
RUNNING THE STATE OF CALIFORNIA APPARENTLY IS WOMEN’S WORK.
And a good thing, too.
Public Utilities Commission chairwoman Loretta Lynch negotiated the Edison bailout so thoroughly that Gov. Gray Davis was left with little more to do than scratch his head over the sudden good fortune. (I’ve disagreed with Lynch’s partisan alibis for why Davis and the PUC didn’t act sooner to address the energy crisis, but I apologize for having previously accused her of being a toady for Davis, who appointed her. To the contrary, she has resisted Davis’ attempts to subvert the commission’s authority and has pursued independent remedies to the energy mess.)
Meanwhile, Lynch and state Controller Kathleen Connell have been spoilsports about the $12.5 billion energy-bond scheme of state Treasurer Phil Angelides, aka Dr. Debt. (Angelides was meeting with the PUC this past weekend, hoping to break the deadlock.) All told, Angelides wants to cover close to $40 billion in bills and social programs by going into hock or tapping pension funds. Sure beats living within your means.
Lynch’s main objection to the Angelides plan is that it would lock in the horrendous long-term energy contracts that Davis negotiated at the height of the electricity price spike, which threaten to saddle Californians and especially California businesses with high electric bills for years to come.
While there are serious doubts about whether the deals can be undone, there may be PR reasons, if nothing else, for the energy producers to revisit them. Lynch suggests it may not even be in the energy industry’s self-interest to burden the California economy with above-market power costs. Maybe a quid pro quo for redoing the deals would be a cessation of Davis’ inflammatory rhetoric and an end to state Sen./trial lawyer Joe Dunn’s inquisition into power-sale practices.
Davis himself is changing direction (surprise!). With an eye to redoing deals, he has met secretly (of course) with power producers, who are at least listening. (In order to exorcise two demons at once, perhaps Davis should hold any sessions to renegotiate power contracts on a suspension bridge.)
Davis’ about-face further weakens Angelides’ case for a $12.5 billion bond issue that has already been pummeled by Connell. At last count the state had spent about $7 billion on energy, raising the question of why California needs to finance 75% more than that at a time of budget pressures and falling energy prices. Moreover, Connell contends there are better ways to handle the state’s cashflow problems than resorting to a massive and unorthodox bond issue that would mainly benefit the Wall Street boys who would get to underwrite it. Connell says the most pressing need is to return $6.2 billion to the general fund, which could be accomplished with one or more general revenue bonds that would be less detrimental to the state’s credit rating.
Connell has tried, to no avail, to temper Angelides’ public declarations that the state is headed for a budget deficit in the range of $10 billion, an assertion she calls exaggerated and alarmist. (It helps make a case for bond issues, though.)
If dealing with all of this seems too daunting for Davis or Angelides, maybe the guys should leave it to the gals.
