CA: State stuck with $12 billion of high-priced power - FERC won't void contracts .....

The Orange County Register ^ | Thursday, June 26, 2003 | ANDREW GALVIN and JOHN HOWARD

[Ernest_at_the_Beach]

California got no relief Wednesday from the Federal Energy Regulatory Commission, which refused to void $12 billion worth of high-priced power contracts with Sempra Energy, Dynegy Inc., Mirant Corp. and other companies that are accused of manipulating power prices.

While most of the original $43 billion in long-term contracts signed by Gov. Gray Davis in 2001 have been renegotiated or have expired, state officials had pressed FERC to let California out of the remaining contracts after presenting evidence that prices in the state's power market were artificially inflated by "gaming" strategies employed by power sellers.

[Ernest_at_the_Beach]

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[Semper Paratus]

"Power to the People" my be revived.

[trebb]

Darn, if California was able to get out of or reduce the power debt, I was going to see if I could get my new (one year old) car price renegotiated and either stop payments or at least cut them in half. Looks like I'll have to pay what I agreed to...

[thoughtomator]

Great, now California residents will have to add a Breach of Contract Insurance surcharge to their power rates...

[Tamar1973]

But in an order read by FERC Chairman Pat Wood, the commission cited a lack of credible evidence that the contracts "are placing the complainants in financial distress or that other customers will bear an excessive burden."

California has a $34 billion dollar deficit, over $12 billion of that is from these jackup rates that this dope says there's no evidence the contracts are placing financial distress on the state of California?! Is this guy on dope or is just one himself?

[for-q-clinton]

Actually what the FERC is doing makes a lot of sense. They are making them pay for what they agreed to, but if it's found that the energy companies profited from illegal activities Cali will get a lot of money back. But first they must prove it before they can get out of contracts and get cash back. All this hurts grayout davis because he needs money now.

[for-q-clinton]

California has a $34 billion dollar deficit, over $12 billion of that is from these jackup rates that this dope says there's no evidence the contracts are placing financial distress on the state of California?! Is this guy on dope or is just one himself?

I'm not sure how the people's republik of California works, but aren't energy costs paid by consumers? Or does California regulate what you pay for energy thereby, incurring costs at the state level? If so, I'd say the contracts aren't putting the state under, rather it's the states policies.

Kind of like if I agree to give all my friends a car (whatever car they want) for $10/month. And then go crying that Mercedes is charging me too much and that I should get out of my lease agreements.

[Tamar1973]

Kind of like if I agree to give all my friends a car (whatever car they want) for $10/month. And then go crying that Mercedes is charging me too much and that I should get out of my lease agreements.

Your analogy falls a little flat because in California, they are paying Mercedes prices for Ford Focus service.

[xusafflyer]

California put itself into the financial distress. The power situation helped it along but your Governor and legislature are the most to blame.

[mvpel]

When California was facing power shortages and rolling blackouts leading up to the election, Governor Davis elbowed the California government into the power purchasing market, and shelled out the billions of dollars in the state surplus and then some to buy electricity at ridiculous costs in order to stave off the shortage.

We went from a multi-billion dollar surplus to a $32 billion defecit thanks to Governor Davis' blind frenzy to win the election by warping the free market and avoiding power shortages.

[heleny]

If Gray Davis and the democrats hadn't run the state economy into the ground, we might still have an energy shortage. Very few new electricity plants have begun operation, and very few new plants have been approved for construction.

Davis probably projected that the economy would be forever strong, so the electricity contracts would have helped, and he expected the tax revenues to continue to skyrocket and fund the runaway spending.

[for-q-clinton]

Your analogy falls a little flat because in California, they are paying Mercedes prices for Ford Focus service.

OK let me try again. Same analogy, but I AGREE to pay those prices and later want out of my contract. OR let's say I go get a loan at 33% interest because I have very bad or no credit. The loan is for 10 years. I also agree that I have to pay the entire loan off (including interest) to get out of the loan. Yes, there are loans like that out there. Then after 6 months I can now get a better rate and better terms elsewhere. Can I just sue the first loan company because I signed a bad contract? Hey they didn't tell me I could get a better rate elsewhere! No dice...I'm stuck. Or let's say I buy a brand spanking new Mercedes for $100,000. Then 2 months later the Euro tanks vs. the dollar AND Mercedes drops the price of the model I bought because they are releasing a much better car for 1/2 the price. So now that $100,000 mercedes is only worth $40,000. Can I sue Mercedes/Chrysler for $60,000?