Re: Lights out for those who don't pay the privatizers.

[Eugene Coyle <eugenecoyle@xxxxxxx>]

Tying what Ken Hanly forwards below to today's California.

    Electric rates for the two biggest utilities are frozen -- at what was a
very high price -- but PG&E is losing around $700 million a month because
wholesale electric prices have soared and PG&E must only charge the frozen rate
-- which now is a very low price.

    PG&E wants to unfreeze rates so the higher wholesale prices can be passed
along to its customers.  They are warning of huge write-offs and Moody's has
put a watch on their credit rating.  It is rumored, probably correctly, that
PG&E nudged Moody's to take the action.

    I'm urging that bankruptcy should be the response.  Have PG&E refuse to pay
the high wholesale prices, while continuing to take delivery of
kilowatt-hours.  Let the bills accrue at  the generator company, i. e. the
wholesale supplier.  Then declare bankruptcy, stiff the wholesalers rather than
the customers.

    Perhaps a reverse privatization -- i. e. a public takeover at the
bankruptcy sale -- will get us cheaper power.

Gene Coyle



Ken Hanly wrote:

> Also they cut off schools and hospitals.
>     Cheers, Ken Hanly
>
> The Guardian (UK)
> 15 September 2000
> Power chief cuts off army and railway
> Ian Traynor in Moscow
>
> Elite army units are seizing power plants, new-born babies are at risk and
> trains on the trans-Siberian railways are grinding to a halt as the Russian
> electricity monopoly gets tough with debtors.
>
> Unified Energy Systems, which is owed more than £5bn in unpaid bills, is
> cutting power to a number of prominent customers, plunging military bases,
> hospitals and companies into the dark.
>
> The "pay up or switch off" policy is due to Anatoly Chubais, the pugnacious
> Thatcherite who has run UES for the past two years.
>
> "Chubais is quite serious about his campaign to cut off customers and the
> government also is slowly accepting the fact that social facilities can be
> cut off, though it is very sensitive about the military," said Hartmut
> Jakob,
> a power sector analyst at Renaissance Capital in Moscow.
>
> That "slow acceptance" let a baby die shortly after birth in a hospital in
> Vladivostok in the far-east last month when the electricity was cut off.
>
> This week armed soldiers from a base of the elite strategic missile forces
> in
> Ivanovo, north of Moscow, seized the local power station to reconnect their
> barracks.
>
> The prime minister, Mikhail Kasyanov, said the disconnections were
> inadmissible and ordered UES to keep the military connected. The defence
> ministry was allocated £32m to pay electricity bills.
>
> Mr Chubais then banned power cuts to the missile forces, but the news did
> not
> seem to penetrate Siberia, where a base in Aleix, near the Chinese, border
> was warned that it would be cut off next week unless it paid £125,000.
>
> A base commander said the troops were removing rocket fuel from the missiles
> and any power cuts could trigger "an environmental disaster". UES suggested
> that the army use its back-up diesel generators.
>
> Two nuclear reactors were closed down, one in Sverdlovsk last week and one
> in
> Chelyabinsk this week, because of "faults in the regional energy system",
> though plant managers and the atomic energy ministry denied that Mr Chubais
> had ordered any power cuts.
>
> "There are two reasons for Chubais's behaviour: he wants to show how
> important he is and he also badly needs the money because UES has run up
> enormous debts under his leadership," a Moscow expert on the electricity
> industry, Moysei Gelman, said.
>
> Gennady Zyuganov, the Communist party leader, said on Wednesday that Mr
> Chubais should be jailed for his policy.
>
> Throughout the economic collapse of the past 10 years the energy industry
> has
> operated on the basis of barter rather than cash. Mr Chubais, who was a
> chief
> draughtsman of Russia's flawed privatisation in the early 1990s, before
> becoming President Boris Yeltsin's chief of staff and election campaign
> manager, is determined to change that.
>
> Last year UES collected only 30% of its receipts in cash, Mr Jakob said. So
> far this year cash receipts have risen to 62% of what UES is owed.
>
> The cash-strapped government is the biggest debtor. Central and local
> government owe 28% of the unpaid £5.6bn. The ministries of defence, interior
> and justice are the worst offenders.
>
> UES owes at least as much to its creditors, and has posted losses for the
> past three years, sullying Mr Chubais' reputation as an ardent free
> marketeer
> who will deliver profits to UES's shareholders.
>
> "I don't agree with the term cut off," he told the St Petersburg Times last
> week. "We're not cutting anyone off. We're switching on those who honestly
> pay for energy, and our policy won't change."
>
> The national railways are said to have made a deal with UES on the backlog
> of
> unpaid bills, but yesterday the trans-Siberian route was locked at the key
> hub of Krasnoyarsk in central Siberia. Power to a 50-mile stretch of the
> line
> was cut on Tuesday and Wednesday pending payment of £500,000.
>
> Mr Chubais is keen to publicise military and railway cuts, but less
> forthcoming about the schools and hospitals.
>
> If the tough tactics continue throughout the winter, the public will suffer.
>
> "Cuts in the social sector are not a large-scale phenomenon, but they're
> happening now, whereas before the authorities did not allow that to happen,"
> Mr Jakob said. "They're becoming much more widespread."
>
> *******