Gene Coyle--2/24 Sacramento Bee

["Seth Sandronsky" <ssandron@xxxxxxxxxxx>]

Pen-l:

Gene Coyle's editorial letter in The Sacramento Bee.  The column Gene refers
to follows his letter.

Seth


B  E  E    E  D  I  T  O  R  I  A  L  S

Letters to the editor


(Published Feb. 24, 2001)

(clip)

McClatchy's article was the most insightful comment on the electricity
crisis that I've seen.

I have been following deregulation from its inception and advised the
California Public Utilities Commission in 1994 that this mess would unfold.
I actually used the word "mess," as a recent look back at the transcript
reminded me.

I hope McClatchy vigorously pursues his vision -- nothing short of it is
going to be effective.

Eugene P. Coyle

Vallejo


Bee Column
Public ownership is the solution to the energy crisis
By James McClatchy

(Published Feb. 18, 2001)

The possibility of the state of California buying power transmission lines
has now emerged as a major part of proposed solutions to California's
electricity crisis. The next step would be for the state to buy the
associated generating facilities.
It will be hard for anyone involved in this unbelievable and painful crisis
to think very far ahead, but deciding on a permanent solution as quickly as
possible will shorten our period of living in a bad- dream emergency. Any
final solution would have to include public ownership of the generating
plants that PG&E and Southern California Edison sold to speculators, as well
as facilities they still own.

The state of California invested enormous amounts of bond money in building
one of the world's biggest water delivery systems -- the Feather River
Project. This project delivers large amounts of water to farms in the San
Joaquin Valley and for general public use in Southern California. It is a
publicly owned utility.

Why can't the state buy the generating facilities and distribution systems
of Southern California Edison and PG&E with bond money, and deliver the
electricity to existing locally owned and managed utility districts, or to
newly organized ones? If some areas decline that option, the state could
create an agency to take over that job.

The Los Angeles Department of Water and Power is locally owned by citizens.
So is the Sacramento Municipal Utility District -- and so are dozens of
other taxpayer-owned systems including Roseville, Redding, Palo Alto and
Truckee. In such arrangements, the public controls its electrical destiny.

The formerly private facilities would require upgrades and badly needed
modernization. Also, to meet population growth, it would be necessary to
find or build new generating plants. All that will cost many millions of
dollars, no matter who owns the electrical systems. But who can doubt that
if private utilities own them, customers will pay more than if tax-paying
consumers own them? If anyone -- particularly legislators and Gov. Gray
Davis -- needs a reminder of what the investors who own parts of
California's electrical supply system have their eyes fixed on, they should
reflect on what the Wall Street firm Goldman Sachs did this past week.

A subsidiary of Goldman Sachs, J. Aron & Co., has supplied a significant
portion of the natural gas PG&E used to make electricity. To protect its
investment and reduce its risk of losing money, the J. Aron firm has pulled
the plug on PG&E, refusing to deliver any more gas.

Why not? Goldman Sachs is a giant financial house with fingers in businesses
all over the world. Why should it subject its managing partners and
stockholders to potentially more losses out here in California? Does it care
about consumers here? While harsh comments can be directed at some
participants in this staggeringly expensive, world-class comedy of errors,
it must be clearly recognized that many energy providers are extending their
own financial resources to protect electricity consumers.

Without this mostly voluntary help, the whole state would be heading more
certainly for an economic and social crisis of unpredictable size. When this
is all over, proper recognition and appreciation should be given to those
officials and companies who put public service above dollar values.

With public ownership of these systems would come increased public
transparency on all aspects of the operations -- where there is little now
-- and thus less opportunity for sweetheart deals with friendly financiers
or brokers.

Separate from the current emergency, rising prices in general for
electricity and gas are generating enormous financial problems for
homeowners and businesses. It is absolutely indefensible that citizens
should be made to pay for the bad business decisions of the utilities, the
Legislature and elected officials, not to mention the rapaciousness of
speculators and selfish political partisanship.

Electricity, natural gas and water systems are natural monopolies. They are
so essential to the very life and well-being of our citizens and economy
that they should not be subject to the vagaries of free-market speculation.
Deregulation of the electricity monopoly is a failure. The monopoly should
be returned to the tax-paying consumers who support it and depend on it.

James B. McClatchy is publisher of The McClatchy Co., which owns The
Sacramento Bee and other newspapers, and is a lifelong California
journalist.



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