Power Piracy: Los Angeles Not Immune

By Wendy McPherson

Both Democrats and Republicans in the California state legislature voted *unanimously* to usher in the deregulation fiasco which transferred social wealth into private hands. The only real solution to the crisis is to use imminent domain to take all the utilities out of corporate control and establish statewide public ownership. Profitteering must be taken out of providing basic services such as electricity.

Those responsible: the politicians and captains of industry who pushed through deregulation which transferred social wealth into private hands.

The solution: transfer all utilities # statewide and nationwide # to public ownership to end profiteering out of providing basic services. No bail-outs! No rate hikes!

Neither the Democrats nor the Republicans in the state legislature want anyone to dig too deeply for this truth because the deregulation law sailed through their chambers with not one dissenting vote after it was proposed by then-governor Pete Wilson. All of the Democratic representatives share responsibility for this blatant gift to shareholders and profit hungry CEOs. Many of those same gift-givers are currently running for public office in Los Angeles. Democrats' and Republicans' reward for doing big business' bidding was hundreds of thousands of dollars in campaign cash to their parties and individual candidates.

Despite the fact that Los Angeles' municipally-owned Department of Water and Power (DWP) has temporarily sheltered Angelenos from rate hikes and black-outs, DWP will eventually fall victim to the crisis deregulation has sparked if the state doesn't use imminent domain to establish complete public ownership of all California's utilities.

Deregulation generates a new racket How does deregulation work? It's simple. There are two kinds of power companies: publicly owned (like DWP) and privately owned (like Con Edison). Before the 1990s, an electrical company was responsible for all aspects of energy delivery: generating it, transmitting it over power lines, and distributing it to customers.

In 1992, the National Energy Policy Act was pitched as a way to foster free-market competition by de-monopolizing the industry. It was supposed to lower prices, improve services and promote new construction. The law mandated the breakup of the organically connected functions that go into making electricity available. Existing companies were required to let other companies with no generating capacity have equal access to transmission grids.

Then middlemen were able to come onto the scene. Wholesale power marketers could now turn a huge profit by simply buying electricity from a generating company (often from a public utility, built and maintained with taxpayer money), arranging for transmission, and then selling the energy at a markup. Only under Capitalism do we find ourselves in this pickle.

Profits High As Crisis Mounts The private utilities, in preparation for deregulation and seeing a chance for huge profits, bought up power plants and shut them down, created huge energy producing subsidiaries outside of the state of California, and positioned themselves to sell their current plants to these subsidiaries. In other words, they sold them to themselves. These newly created companies--like U.S. Generation--along with major energy conglomerates like Duke Power, have held down production, jacked prices up into the stratospheres, and now hold the working taxpayers of California hostage.

The utilities that claim poverty are still in charge of transmission and distribution of power and now must pay exorbitant prices--often to themselves in another form (i.e. U.S. Generation) for this electricity. But the price they can charge us is still regulated, so they cannot pass these costs onto us through rate increases. So they threaten to go bankrupt, lay off tens of thousands of workers and turn out the lights if we -- the state's workers and taxpayers -- do not bail them out with immediate infusions of cash.

Every link in the energy generation process (generation, transmission and delivery) will reap billions in profits if we allow this bailout. Here is how the bailout would work. The producers can still cut production and raise prices. The state will pay $10 billion for transmission lines that the utilities themselves value at only $3 billion. The distribution companies, flush with this public cash, can continue to keep collecting from us--the ratepayers. To top it off, the producers refuse to build new plants unless we loosen environmental and job safety regulations on the construction of new plants, creating a pollution and workplace nightmare. George W. Bush's solution is to drill for oil in Alaska's Arctic National Wildlife Refuge and ashcan laws safeguarding the environment.

Solution: public ownership None of these "solutions" solve the fundamental problem of a few corporations making mega-profits off a 21st century necessity of life # power. The bottom line is we must demand that electricity be treated as a public resource--like wind, water, and the sun--that must be owned by the public and controlled by workers to provide for the needs of the public. We must demand that our elected representatives:

· Cancel the proposed bailout; reverse the current deregulation laws; institute a complete takeover, without compensation, of for-profit utilities and marketers and replace them with a statewide, coordinated, publicly owned utility. · Pressure the federal government to repeal the 1992 Energy Policy Act, nationalize the utilities industry, and administer it by elected regional utility boards; demand more federal funds to develop renewable, eco-friendly energy resources. · Charge big corporations higher rates than residential customers and small businesses; provide electricity free to low-income/poor users, including people with disabilities and seniors.

If we ran the utilities under public ownership and controlled by workers, we could do what needs to be done in the industry: end the layoffs, guarantee union jobs throughout the industry, and restore the utility workforce to necessary levels using affirmative action in hiring; strengthen and enforce safety and environmental regulations; and develop aggressive equipment maintenance programs.

And finally, the Los Angeles City Council must guarantee that Los Angeles does not divest or deregulate any aspect of DWP.

I am proud to run for city council on a platform calling for publicly owned power and I advise voters only support candidates who do the same. This important issue pits the profit mongering electrical utility industry on one side against the quality of life and the economic future for the entire working class on the other. Which side are you on? Let's all come together and use this as an opportunity to build a movement to seize the plants!

Wendy McPherson, Freedom Socialist Party candidate for Los Angeles City Council District 13, is a public librarian who lives and works in Echo Park, a feminist and leader in Radical Women, 15-year union activist, AFSCME Local 2626 member, and lesbian/gay/bi/trans advocate who defends affirmative action, immigrant rights and civil rights.