The Pry Vat See

By Published On: December 13, 2003

<p align=center><i>The Pry Vat See sat with his eggs in his hat And a marvelous hat it was Pipes of steam Gleams of reams Of papers with revenue streams In the hat sat green power, brown power, and power from crude Powers of towers, powers of glowers, and millions shower to boot And the Pry Vat See sat with his eggs in his hat Saying “No one can see my loot” If loot it be ?Cause we can?t see The hat that holds boodles of loot</i></p> I couldn?t help but be reminded of Dr. Seuss when Southern California Edison told me the utility wouldn?t talk about confidentiality issues at the California Public Utilities Commission because they were a secret. By nature and profession, I?m a big supporter of the First Amendment and making public absolutely everything that isn?t personal. I find the recent controversy at the commission over confidentiality issues tardy, but still a breath of fresh air. It surfaced a couple of weeks ago in the commission?s approval of Pacific Gas & Electric?s renewables procurement. It?s also an issue in Southern California Edison?s current Mountainview case and private generators? maintenance standards. The move to a deregulated market put confidentiality in the realm of market secrets. But the market morphed into a hybrid in which ratepayers and the government are called to protect utilities and, by extension, private generators with utility contracts. Much of this confidentiality is a throwback to the days of deregulation, and now it no longer applies. Secrecy and government/ratepayer bailouts don?t mix. First it was the secret contracts negotiated by the Department of Water Resources. Governor Gray Davis feared their publication, and the contracts were later pegged at costing ratepayers $40 billion. The details were forced into public by then-state controller Kathleen Connell and media organizations? lawsuits. <b>What happened?</b> Some of the deals were reasonable; some were arguably skewed toward overprofitability. Most were renegotiated for better provisions for the state and ratepayers. Without publication of terms, the state would probably still be stuck with the original, rather high rates from the initial negotiations. Edison and the CPUC made a secret deal to help keep the utility solvent. Consumer advocates cried foul. The case went to the state supreme court and the Ninth Circuit, which have upheld the deal made in secrecy despite the state?s open-meetings law. <b>What happened?</b> They are getting away with secrecy in the ?just trust us? mode. Edison is able to steady itself in the financial community and continue service. Perhaps ratepayers would choose to help the utility, but they are kept in the dark by policy makers who know ratepayers still have to pay up. This summer the CPUC deemed that Edison was solvent by closing its balancing (PROACT) account. This month, Edison sent a dividend of $945 million to its parent company, Edison International. While legal interpretations are still being worked out on the liability of utility parents to their affiliates, it looks unlikely ratepayers will have access to that money. Another Edison case, Mountainview?in which the terms of a power plant buyout and build agreement remain secret during hearings at the CPUC?may turn out to be good for both the utility and ratepayers. If so, why keep it secret? <b>What could happen?</b> The uncertainty caused by the secrecy makes investors nervous and Edison?s credit ratings falter. Edison customers, particularly large customers, see the secrecy as yet another reason to default to direct access?where they know the terms of their own contracts. In the generation maintenance rulemaking at the CPUC, companies that own generation facilities throughout the state are screaming over the proposition that they would have to make all their power plant information?efficiencies, maintenance logs, and the like?available to the commission on demand. <b>What could happen?</b> Generators fear not so much each other as that the information would become ?politicized,? according to Gary Ackerman, director of the Western Power Trading Forum. Generators could be made scapegoats for the cost of power. But generators have brought on the politicization?not so much by potentially illegal activities as by misunderstanding the importance of electricity as a societal ?good? while simultaneously exploiting its profit potential. Releasing information would create a constant reminder that when it comes to electricity, there is a limit to socially acceptable behavior within market parameters. Renewables procurement contracts sparked a renewed interest at the commission in once again allowing the public to see where its money is going. The details of the contracts being discussed for additions to utilities? renewables portfolios are divulged only to a select group of participants in the ?procurement review group.? As commissioner Carl Wood?whom some brand ?commie Carl??said, ?There is no access to fundamental information relevant to public agency decision making, no opportunity to meaningfully comment, and no due process.? Forgive me, but that?s antipinko and pure democracy. The case that Wood was addressing at the time was Pacific Gas & Electric?s procurement, but it could have been that of any utility. PG&E maintains that if details such as those on peak demand and price were public, it could encourage the type of alleged withholding behavior and congestion creation that led to severe price spikes during the energy crisis. PG&E spokesperson Jon Tremayne rejected the theory that publication might do the opposite in this postcrisis market?that it could lead to competitive prices as more companies want secure contracts with utilities and no longer want to play the risk in the market. I see a clear difference between the utilities? demands for secrecy and those of privately owned generators?although I support neither. The state promises a hefty rate of return on utility investments, around 11 percent. Ratepayers have no choice but to pay off on that promise. Under normal circumstances, utility shareholders get to participate in that guaranteed stream of profits. Those on the hook for payment must be able to access information on where their money is going. That?s the tradeoff. Private generators, however, take the risk of no guaranteed rate of return. Perhaps they?d be better off if the details of their operations were made public. It?s a long shot, but if those businesses are run well with the books open, they could entice new investors looking for stability?even socially responsible funds. The commission routinely grants requests for secrecy from utilities. All that utilities have to do is ask and it is incumbent on the commission to prove it should do otherwise. This same commission routinely denies media requests for it to divulge details under the California Public Records Act. We?re in a post-energy-crisis market. It?s imperative that we be able to look into the hat of the Pry Vat See now. A few deals might be made better. A few might be blown. As Wood said, ?We cannot allow this denial of open, accountable public decision making to continue.? What?s the worst that could happen?

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