Some inside California info for those of my friends out there who are not here and don’t follow our politics that closely…
A few years ago our local utility (Sempra Energy) had some issues with decommissioning a nuclear power plant (the San Onofre Nuclear Generating Station, called SONGS). There were problems with the plant, culminating in a need to replace the steam generators, which was done in a way that resulted in defective cooling tubing being installed (at a cost of $680 million.)
Rather than go back to Mitsubishi and tell them the products they provided were defective and they needed to replace them – as you or I would do if that money were coming out of our own pocket – the utilities decided they simply wanted to shut it down.
That was going to cost money – big money, $4.7 billion dollars. Not only to close down the generators but to replace the power they generated.
Utilities in California (like most states) are given a monopoly over specific areas, in exchange for being (supposedly, as we’ll see) “regulated” by state entities tasked with doing that, in theory “on behalf of the people.”
In practice, the utilities commissions tend to be managed by appointees who are there because they have connections to political contributors of whoever is in power. Often that means those “regulators” are former utility executives, who likely still have deep ties to the executives in the companies they’re regulating – the people whose offices they sat in for decades, golfed with, etc.
Now… the decisions leading up to the shutdown of San Onofre may have been valid. Perhaps it was no longer economical to operate the generator, maybe a nuclear power plan on the shoreline of the ocean (and theoretically subject to the same tidal wave exposure as Fukushima) was just not a good idea.
Regardless, none of the decisions involved in that were made by the rate payers. All those decisions were made by the ownership, management, and shareholders of the utilities.
Proposals were made as to who was going to pay the cost of those decisions, however. Because “accepting financial responsibility for the decisions they make” is not a standard in any public entity – unlike private business.
The total cost was projected to be $4.7 billion dollars. For reference, the utilities involved typically pay out close to $1B a year in dividends to shareholders and ownership, so while $4.7 billion is a large number, it would represent 5 years of dividends – and the process of shutting the reactors down will undoubtedly take longer than that (it has now – as of October 2020, been going on for 8 years and counting…)
The utilities of course proposed that rather than have to pay that cost themselves, perhaps reducing the multi-million dollar payouts the utility executives receive every year, that cost should be borne by the ratepayers (the people who had nothing to do with the decisions leading up to the need for that, of course…)
That meant the California Public Utilities Commission got involved in the negotiating process, again supposedly “on behalf of the people”.
Those negotiations are, of course, supposed to be done in public. In the open. So we can know whose interests are being represented.
That was, in theory, done. And a “settlement” was made that saddled the ratepayers with responsibility for $3.3 billion of that cost. The utilities would absorb the remaining $1.4 billion. In other words, about a year and a half of dividend payments.
After that settlement was approved by the CPUC, some interesting information came out – as a result of a Public Records Request – on that negotiation process.
It turned out in the course of those negotiations the President of the Utilities commission flew to Poland for “lunch” with a representative of the company – despite the fact that they live within blocks of each other in Orange County.
That meeting – which was documented in notes on a napkin from the restaurant (later discovered and revealed) – lead to that agreement saddling ratepayers, not their shareholders, with the majority of the cost of that decommissioning.
The ratepayers – who had nothing to do with the poor decisions that lead up to those costs, of course.
Nor did the ratepayers ever benefit from that billion dollars in annual dividends paid out by the utilities involved .
The profits of shareholders – who benefit from those dividends (not to mention multi-million dollar salaries and bonuses for key executives) are apparently far, far more important to the California Public Utilities Commission than raising rates for The People, including poor people, seniors, people “going solar”, etc.
Who, again, had nothing to do with the decisions leading to those costs.
That meeting was, of course, illegal collusion. The President of a government regulatory body is not allowed to meet privately and hammer out a deal out of the public view, with anyone. Much less flying to a foreign country to do it.
Enter Kamala Harris.
Once this was uncovered, Harris – as the CA Attorney General at the time, representing the people of California – started a lawsuit. Doing her job, as she should, and as we expect our Attorney General to do. On behalf of the People.
The state had pretty hard evidence – flight records, cell phone records, and the actual napkin the deal was sketched out on. It’s likely the end result of that suit would have invalidated that agreement and sent it back for renegotiation.
Maybe someone would even have gone to jail, the crime is a felony.
That renegotiation would have drawn a lot of scrutiny, likely resulting in a worse deal for the utility shareholders.
And of course going to jail would be very inconvenient for any of the parties involved.
Kamala Harris, the self-described “Top Cop” of California, and in theory the best legal mind available to the People of our state, conveniently missed the filing deadline for that case, by ONE day….
The result? Utility shareholders get to keep a billion or two that they may not have been able to keep, and ratepayers get to pay for that… Sorry about that.
And of course anyone involved who would have spent time in prison doesn’t have to worry about that.
Convenient for both, don’t you think?
Now… in a suit the size of this one – with $4.7 billion at stake, one would think the California Attorney General, would have had a very good fix on what the filing dates were.
Think she knows how to use her calendar?
Or perhaps it was simply convenient to miss that deadline, given that it resulted in literally BILLIONS of dollars flowing to special interests AND highly connected people staying out of jail.
Do we think those people might feel a bit of gratitude for that?
On one hand we could just say “she’s incompetent”, right? .
On the other, we could say saving utility shareholders few billion dollars and avoiding sending people to jail worked out better for her than prosecuting Sempra Energy and the Public Utilities Commission.
You make the call, but I think it’s obvious.
She’ll fit right into a Biden administration, given what we already know about the lengths HE went through in the past to make sure bankruptcy provisions were changed to make them more difficult for ordinary people – and easier for corporations.
Yup. Two people who most definitely have the interests of the People in mind.
Except, of course, when they’re not running for office and actually doing their jobs.
Jacobin Magazine 8/17
The Two Faces of Kamala Harris