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Tom should file that lawsuit right now instead of waiting until he is Governor, since as a ratepaying citizen, he is a party to that contract.

IANAL, but there is a suit currently being heard on this point. Davis can't stipulate to the conflict of interest since it was his appointee involved. Tom will.

The PUC is unable to set rates, never has been able to. The PUC is able to approve rates proposed by electric companies and able to set temporary rebates or increases. They can not by fiat raise or lower electrical rates.

Do you really think that the companies would dare to not propose lower rates in the face of greatly reduced costs? It would be suicide for them not to.

Do you really think that the companies would dare to not propose lower rates in the face of greatly reduced costs? It would be suicide for them not to.

The following is from an interview between Davis and Frontline, in May of 2001. I include this interview before my reply, because it's rather important...

FL: The logical question is, if you're locked into long-term contracts--which I assume the ratepayers or the taxpayers of California are obligated to pay--and at the same time, you have a surplus by 2003, then we, long-term, will be locked into paying for electricity at a very high rate, no?

Gov. Joe: I'm assured by David Freeman and his team that they have cut the best possible deal, so that this year about 40 percent of our power is purchased through long-term contracts rather than on the spot market; next year about 55 percent; the next two years about 70 percent. Then it drops back down to around 60 percent, because we expect by about year five, the price of electricity will have fallen, and the spot market may be the cheapest way to buy power. Today it is absolutely the most expensive. ...

California will buy, this year and next, 70 percent of the anticipated (in 2001) energy needs of California at the contract rates. That energy is passed on to the utilities who are required to pay no more than 20 percent over the spot rate. The remaining energy needs they buy at spot prices.

If the state pays 6.5 cents per kWhour, and the spot market rate is 1.2 cents per kWhour, the state bleeds money and the utilities make a profit. If the spot rate is over 6.5 cents, the utilities lose money.

Unfortunately, the market spot rate paid is not released to the general public until six months afterwards. Back in January, the spot rate for the majority of the day was .9 cents per kWatt-hour.

Not only is the state bleeding money because of this wacko deal, but if the utilities energy requirements fall under the 70 percent threshhold, the state has to sell the excess energy on the spot market.

So, to get back to your question, yes, the electric companies dare not to ask for a rate change because the PUC will hammer them. The only reason why the 'energy rebate' is coming is that the PUC itself negociated the payments from generators, not from the utilities.

In addition, the only way California's Governor could change this is by defaulting on all contracts, going into bankruptcy, and forcing a judge to look at all these deals. Taxpayers and ratepayers have more rights in this case than the Government of California.