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		 Subject: Sacramento Bee--Dan Weintraub column: Consumer rep envisions ulti 
mate confrontation


> Team,
> This is the best synopsis we've seen of Harvey Rosenfield's motivations
> for putting a referendum on the ballot.
> **********************************
> Daniel Weintraub: Consumer rep envisions ultimate confrontation
> Sacramento Bee
> May 15, 2001
> 
> Now that Gov. Gray Davis has rallied his fellow Democrats, run over the
> Republican opposition in the Legislature and set the state on a course to
> borrow $13 billion to pay for a few months of electricity purchases,
> there's probably only one person who can stop him: Harvey Rosenfield. 
> Rosenfield is the Santa Monica-based consumer advocate who tried to halt
> California's experiment in electricity deregulation before it got started.
> His 1998 ballot measure failed, and that campaign is blamed in some
> circles for delaying construction of new power plants just long enough to
> cause the electricity shortage that's helped send prices heavenward. 
> But if Rosenfield's last ballot initiative got the state's energy
> establishment in a snit, the one he's contemplating now would positively
> push them over the edge. He is seriously considering launching a signature
> drive to force a referendum on the legislation Davis just signed to
> authorize his $13 billion energy bond measure. 
> That bond, to be repaid by ratepayers, is supposed to reimburse the
> state's general fund for the cost of electricity the state has been buying
> for consumers since January, when Pacific Gas & Electric and Southern
> California Edison ran out of money. The bond measure also will be used to
> delay the pain of the extremely high prices expected this summer. Without
> it, consumers would immediately face another staggering rate increase,
> probably well into triple digits. 
> The alternative would be a state budget in shambles. All the tax money
> Davis has spent on electricity this year already was earmarked for
> traditional services such as education, roads and health care. A
> referendum that killed the bond measure would leave a gaping hole in the
> budget that could only be filled by a huge tax increase or unprecedented
> spending cuts. 
> Rosenfield is something of a publicity hound, and his talk of a referendum
> may be just that. Collecting 750,000 signatures in less than 90 days,
> which is what's required to qualify the referendum, would be a massive
> undertaking. Even Rosenfield concedes that the chances are no better than
> 50-50 that he will proceed. But this is a man who has qualified two
> measures for the ballot already, including one in 1988 that brought on
> regulation of the California insurance industry. You have to take him
> seriously. 
> The question is why he would even consider it. Why would a man who fancies
> himself a friend of the ratepayer ponder a move that would force consumers
> to swallow a massive rate hike, or else bankrupt the state? Because
> Rosenfield's goal is to see the destruction of the entire private power
> system that's now serving California -- and raking in enormous profits for
> its owners. 
> And if it were up to him, he'd be willing to risk economic catastrophe to
> make it happen. His theory is that the power generators will simply keep
> raising their prices as long as the governor keeps putting more money on
> the table. It is, he says, like giving crack to an addict. Take that money
> away, and the generators will kick the habit, fast. 
> "If bleeding dry the general fund is foreclosed, and politically or as a
> matter of economics you can't raise rates that high in the state, the only
> thing the governor can do is turn to the generators and say, 'I'm taking
> your plants.' At which point they will say, 'OK, all right, we're lowering
> our prices,' or some face-saving thing will happen. The ultimate showdown
> between naked capitalism and populist outrage occurs." And he's convinced
> that capitalism will blink. 
> "If the lights go off in California, and the economy goes down the tubes,
> then 20 years of Republican ideology, of less government, free markets,
> competition -- all of that goes down the tubes. 
> "All you have to do is look at history to see that when there have been
> economic cataclysms that have decimated the economy, people want action
> and they'll do anything, whether its seizing private property, or
> whatever. There will be a revolution, and I don't think the political
> institutions in this country are prepared to push things to that point." 
> The Legislature already has set a Nov. 15 deadline after which the state
> budget is supposed to be off-limits to Davis' power-buying ways. But
> that's not good enough for Rosenfield. By then, he thinks, Davis will have
> burned through the entire proceeds of the first bond measure and the total
> tab will be approaching $20 billion. Rates will have to rise again to pay
> that bill. 
> Rosenfield is prescribing an economic amputation -- without anesthesia --
> to stop a painful and dangerous infection. But he is not the only one
> thinking about the doomsday scenario. 
> The power generators themselves have lately been lining up to try to cut
> deals with the state. They have offered to take caps on their profits,
> forgive some of the debt that's owed them, anything to keep the system
> running without further provoking the public's ire. They know that
> Rosenfield's kind of anger can be contagious. They want to contain it
> before it spreads. 
> 
> 
> The Bee's Daniel Weintraub can be reached at (916) 321-1914 or at
> dweintraub@sacbee.com <mailto:dweintraub@sacbee.com>.
> 
> 
>