By The River

I received a call late today from Glen Thomas, the former aide to Gov. Tom Ridge and chairman of the Public Utility Commission. Thomas said I was incorrect in writing that he was the gatekeeper for the Ridge Papers in the Pennsylvania State Archives and that he had no control over access to them.

Ridge's archivist, Dr. Nicolette Parisi, told me about a year ago that I had to see Thomas if I wanted to view Ridge documents related to the birth of electric competition in 1996. I subsequently sent inquiries to Thomas but got no response. He says he never received them, but that it wouldn't have mattered anyway because he was not the gatekeeper.

Thomas is presently a consultant, and among his clients is the organization that represents power plants in Pennsylvania that aren't owned by one of the regulated utilities. He formerly was a lawyer for the firm of Blank, Rome, but denies he was a "utility lawyer." That's kind of a generic term for a lawyer who does specialized work relating to regulated or unregulated purveyors of electricity, gas, water, or telecom services, and it is a frequent career path for ex-PUC commissioners with law degrees. But if he wants to not be thought of as a utility lawyer, I'll grant the point. Thomas said he no longer practices law in any case.

In the end, the Ridge Papers are still locked away for about 25 years while being stored at public expense in the state archives, and we don't know what happened behind the scenes back then between Ridge and Enron's Ken Lay, and Texas Gov. George W. Bush.

Posted by David at 10:16 PM | Permalink | Comments (1) | TrackBacks (0)

A report is out this morning from the Justice Department Office of Inspector General today with the ominous title, "An Investigation of Allegations of Politicized Hiring by Monica Goodling and Other Staff in the Office of Attorney General."

Here is the full Monica Goodling report.

Goodling, the York Haven, Pa., native, ethically-challenged Messiah College graduate, former West Shore Country Club lifeguard, and, most importantly, George W. Bush devotee, is accused of weeding out Democrats and lesbians from people hired as attorneys in the Justice Department. If true, that's against the law. Political hiring is legal for only a tiny fraction of the Justice Department's 110,000 employees. Hiring of everyone but a few top-ranking people is subject to Civil Service restrictions, which bar basing hiring decisions on politics or even asking about them. Always been illegal (in the modern era), always will be illegal.

The report concludes that she and several colleagues broke the law and violated department policy in their actions. The question is whether she can be prosecuted--she was granted limited immunity for her testimony before Congress where she talked about a lot of this stuff. And the report says nothing about the people above Goodling in the food chain and how they may have been involved in the illegal actions. Former Attorney General Alberto Gonzalez, her boss, claims he just didn't know what she was doing.

Perhaps he didn't, although if you believe that, you probably also believe that low-ranking Army enlisted personnel decided on their own that torture of prisoners at Abu Ghraib in Iraq was okay. It's time for some high-level accountability in the Bush Administration.

Posted by David at 12:09 PM | Permalink | Comments (0) | TrackBacks (0)

With former Pennsylvania Gov. Tom Ridge being talked about as a possible running mate for John McCain this fall, the hundreds of thousands of pages of documents he generated as governor from 1995-2001 need to be opened to public scrutiny.

As I noted last week, Ridge's papers are stored at public expense in the State Archives in Harrisburg, but are closed to public access for around 25 years. In theory, a journalist can ask for access, but in reality you won't get in. I was told by Ridge's archivist, Nicolette Parisi, that Glen Thomas, the former Ridge aide and Public Utility Commission chairman, was the person to see about access to these documents, but he denies that. Regardless, they remain locked up.

Those might have been interesting, given the close involvement of the corrupt Texas corporation Enron in the Pennsylvania electric competition debate back then, the personal visit Enron chairman Ken Lay made to Ridge in Harrisburg, and the call then-Gov. George W. Bush of Texas made to Ridge on Lay's behalf. No wonder Ridge locked them away.

No matter what the technical legal status of Ridge's papers may beunder state law, the public has moral rights to them. We paid the taxes that Ridge used to govern the state. It is only right that we be able to see what went on in our name during his administration. These are not personal notes from Ridge to his wife we're talking about. They are the documents generated by Ridge and his direct staff carrying out their official duties. Gov. Robert Casey's papers were opened not very long after he left office.

In many other states--Texas, ironically, being one of them--a governor's papers are considered public property and are open almost from the day they arrive in the state archives at the end of his or her administration. But not here. Even the new Open Records Act exempts documents in the State Archives from mandatory public access. Pennsylvania had one of the worst freedom of information statutes before that law was passed, and still does.

Will Ridge be the nominee? Probably not. As much as McCain and Ridge apparently like each other, McCain will almost be forced to pick a hard right anti-abortion conservative as his running mate. Ridge is at least nominally pro-choice, which will likely doom his chances.

The only chance Ridge really has is if McCain decides the possibility of winning Pennsylvania with Ridge on the ticket outweigh the losses of votes from the religious right. Interestingly, when Ridge was considered for vice president by Bush in 2000 and then for Secretary of Defense in 2001, the main thing used against him by the right, in addition to his pro-choice positions, was that he had no defense experience beyond his Army service in Vietnam. Gary Bauer called him a "peacenik" and Robert Novak attacked him for not supporting President Reagan's Star Wars initiative.

I personally don't think Ridge being on the ticket will matter much to McCain in whether he wins the state. Ridge has been out of office and away from the state for years. The fact that Camp Hill Republicans think Ridge means victory doesn't really mean much in the end. Whether Gov. Rendell's people are finally talking to Barack Obama's people will have far more impact.

And McCain isn't running for President of Pennsylvania. The only thing people nationally know about Ridge is that he was the first Secretary of the Department of Homeland Security. In the minds of many voters, that equates to long lines at airports, color-code security alerts, and the disaster in New Orleans, even though that happened 10 months after Ridge stepped down as DHS secretary.

Ridge did some good things as governor, but electric competition has not turned out to be one of them. In the name of understanding how we got into this mess, and so the public at large can better understand what type of a vice president he might be, it is time to open the Ridge Papers to full public scrutiny.

Posted by David at 06:09 AM | Permalink | Comments (1) | TrackBacks (0)

You may well have missed it, but there was an interesting story this week in the Lebanon (Pa.) Daily News by reporter Richard Fellinger about how Pennsylvania Attorney General Tom Corbett's own chief of staff and other staffers move back and forth between their jobs and getting the boss re-elected.

Corbett, of course, is a Republican and newly the scourge of the Democratic Party in the Legislature. Earlier this month, he indicted 12 Democrats for allegedly conducting politics on the public dime. Among the indicted were Michael Manzo, former chief of staff to House Majority Leader Bill DeWeese, and Jeff Foreman, former chief of staff to House Majority Whip Mike Veon, who was himself indicted. Of course, it's Corbett's job to enforce the law, but the timing of the arrests just as the fall campaign is getting under way, and the televised perp walks of a hand-cuffed Veon and others--who haven't yet been convicted of anything-- suggest that Republican political goals were as important here as law enforcement.

Corbett is in a re-election battle this fall with Northampton County District Attorney John Morganelli, the Democratic candidate, who wasted little time after the Lebanon Daily News article appeared in accusing Corbett of hypocrisy. The Republicans also hope to retake the House, which they lost by a single seat in the 2006 election after years in control.

Fellinger's article points out that Brian Nutt, Corbett's chief of staff, has moved off the state payroll to become his campaign chief, and that several other staffers have played dual roles as well. Kevin Harley, Corbett's press secretary, insists it was all perfectly legal. "There is a right way to do this, and a legal way, and that's what is being done," he told Fellinger.

But political activist Gene Stilp, who applauded the Bonusgate arrests, remains troubled. "This is not showing good judgment," he said of Corbett. "He has to be squeaky clean, and this is not squeaky clean."

One of my Shipoke neighbors, a lawyer, says Corbett may have opened a Pandora's box, and wonders who on the Attorney General's staff made the decision to stage televised perp walks or even to bring certain cases before the statewide grand jury. Permanent or political staff? God knows we need cleaner politics in Pennsylvania, but we don't need politicized justice.

Posted by David at 05:48 AM | Permalink | Comments (1) | TrackBacks (0)

Public Utility Commission member Tyrone Christy last week came closer than any other high-ranking state official to declaring electric competition to be a fraud.

In case you've forgotten, electric competition was born in the mid-1990s, fathered by several academic theorists (kind of like the three potential fathers in the new film "Mamma Mia!", but not nearly as funny) and midwifed by the corrupt Texas corporation Enron, especially in Pennsylvania. Ken Lay himself called on Gov. Tom Ridge in Harrisburg to press his case, and for a good measure had his friend George W. Bush, then governor of Texas, phone Ridge to tell him Enron was okay. Fishy? You be the judge. Ridge's papers on the birth of electric competition in Pennsylvania are stored at taxpayer expense in the State Archives, but are locked away at his demand for around 25 years (Gov. Casey's, by contrast, opened almost immediately). The state's new Open Records Act, another bad joke, specifically exempts records stored in the Archives.

Electric competition seemed like a good idea in 1996. Consumers in Pennsylvania were struggling under ever-rising electric rates in the 1990s. In many cases, these were due to the soaring cost of nuclear plants, especially Philadelphia Electric's Limerick plant. People of good intelligence believed that if only a free market for electricity could be created in place of regulated monopolies, power prices would fall dramatically. It made sense in Economics 101, but apparently not in the real world. In fact, prices have gone up sharply. The lowest estimate of what Pennsylvania's will pay after the end of rate caps in 2009 and 2010 is about 35 percent higher than they pay now. PPL Corp. told the SEC that its profits will rise about $850 million in 2010 after the rate cap expires.

Here is what Commissioner Christy had to say at the July 17 PUC meeting about the wholesale power market:

"The [PUC] is pushing Pennsylvania's economy into a competitive wholesale market that exists in name only," he said. "The reality is that the wholesale market consists of a series of artificial PJM [regional power pool] pricing mechanisms that produce the highest possible prices for power...The Commission needs to change direction and take steps to insulate Pennsylvania from this dysfunctional market as best we can."

Want some examples? Try to wrap your brain around the idea of "Locational Marginal Pricing." This sets the price of all wholesale power bid into the market at the price of the HIGHEST, not the lowest price bid. It's a great deal if you own a power plant, as the people who sit on the governing board and committees of PJM in Valley Forge tend to do. If you own a small, inefficient plant, you get a price that lets you survive. If you own a cheap, huge, coal-fired or nuclear plant, you reap a bonanza. It is supposed to encourage the building of more transmission capacity.

Or there's the infamous Reliability Pricing Mechanism, or RPM. That, in effect, requires ratepayers large and small to make payments to owners of power plants to encourage them to upgrade old power plants or build new ones. But there's no requirement they do so, so the money, like the payments auto dealers used to extract for undercoating, can go for who knows what.

Christy obviously knows, as I do, that there are powerful people out there who are heavily invested in the delusion of electric competition and are waiting, slobbering even, to collect their huge profits come 2010. They want you to believe there is nothing that can be done except to deal with the higher prices. Other people truly believe that electric competition will somehow become real and make the high prices go away. Some of them sit on the PUC, which last week (Christy's comments on the market are from his dissent) voted down a proposal supported by state Consumer Advocate Irwin Popowsky to require West Penn Power, which serves State College among other places, to take steps itself to provide customers with the lowest price for power possible after its rate cap ends.

Instead, a plan favored by the power plant owners and middlemen was approved that will require West Penn to outsource its power acquisition to middlemen who will deal mainly with the big power suppliers. The middlemen will add layers of profit and cost that will come out of consumer pockets, and the public will have almost no ability to determine whether they are truly getting the cheapest possible power. That's competitive information, after all, and these are private businesses. Just write your check and shut up.

Sonny does a yeoman job in protecting the public interest in utility issues, but he can't do this one alone. It is regrettable that the most visible champions for extending the electric rate caps, which would at least delay the catastrophe, are Sen. Lisa M. Boscola, D-Lehigh, and Sen. Vincent Fumo, D-Philadelphia. Boscola is committed to the issue but not a particularly effective advocate, and Fumo is weighed down by legal problems and in the last six months of his Senate term. He has done great things for consumers in the past, but his day is over and a new champion in the Legislature is needed.

Any volunteers?

Posted by David at 11:33 PM | Permalink | Comments (0) | TrackBacks (0)

In the past few days, two prominent murderers have sought release from their life sentences. One of them will be going home, and that's shameful.

Susan Atkins, the brutal accomplice of Charles Manson in the infamous 1969 Manson Family murders of actress Sharon Tate and six other people, sought compassionate release to die of cancer outside of prison. In Israel, the cold-blooded Palestinian terrorist Samir Kuntar is due to be exchanged for the remains of two Israeli soldiers kidnapped across the Lebanese border in 2006.

Although Atkins is largely immobile and barely alive, the Parole Board, responding to pleas from relatives of the Manson Family victims and many other Californians, decided that her crimes were so horrific that it would, in essence, shock the conscience to give her compassionate release.

Israel, in a decision that must be condemned, decided to free Kuntar because of the importance it places on both the freeing of its soldiers from captivity and or the recovery of their bodies. My response? Sorry, that's not a reason to release a murderer like Kuntar, who in 1979 shot to death an Israeli father in front of his four-year-old daughter and then smashed the girl's brains out with a rifle butt.

Remember the Achille Lauro hijacking in 1985 and the murder of wheelchair-bound American Leon Klinghoffer? Kuntar's colleagues hijacked the cruise ship in an effort to free him. The disastrous 2006 Israeli invasion of Lebanon was sparked by the same cross-border raid in which the two Israeli soldiers were kidnapped.

At some point, enough is enough. I know, that's easy for me to say. But the release of Samir Kuntar, even if he is killed later by Israeli agents, shocks the conscience.

Posted by David at 06:22 AM | Permalink | Comments (0) | TrackBacks (0)

The Toronto Globe and Mail reports on its website that Canada is about to send back U.S. Army deserter Robin Long to face military justice in the United States. Long deserted and fled to Canada after concluding that the war in Iraq was wrong, for reasons that included the torture of detainees at Abu Ghraib and elsewhere.

Canada sheltered close to 100,000 American draft resisters and perhaps a thousand deserters during the Vietnam War, in large part because Canadian Liberal Prime Minster Pierre Trudeau in 1969 opened the borders and didn't return otherwise law-abiding young Americans to the U.S. Although the two nations had a criminal extradition treaty, Trudeau found a loophole: Canada had no draft, so draft evasion was not a crime there. Border guards were instructed not to ask young American men about their draft status. He even went to Washington in 1969 and defended his decision in a news conference at the National Press Club, rubbing his thumb in President Nixon's eye.

So what has changed? For one thing, the current Prime Minister, Stephen Harper, is from the Conservative Party and is an ally of George W. Bush. Canada as part of NATO is engaged in a shooting war in Afghanistan and has had soldiers killed. And basicly, deserters don't find the same level of public sympathy that draft evaders did. I understand and appreciate Long's argument, that he signed up to defend his country, not to fight an illegal war of aggression in Iraq and participate, even indirectly, in the George Bush torture machine. But many people don't, harboring a mental image of someone running from the battlefield that really isn't very accurate. The military is the only industry where they can sell you a bill of goods to get you to take the job, and then you can't quit once you figure it out.

Over the past three decades, especially after Presidents Gerald Ford and especially Jimmy Carter allowed the evaders and deserters in Canada to come home without penalty, I can't tell you how many Americans have told me that if the draft was ever re-instituted, they would send their son to Canada. It was the great American mental escape hatch, and not just for military matters. If abortion was ever made flatly illegal in the U.S., well, there was always Canada. That escape hatch is still open as far as I know.

And perhaps it would be for draft evaders, too, if the U.S. ever managed to start drafting young men again and then sent them off to an unpopular war like Iraq. But maybe not. Pierre Trudeau was a rare and amazing leader. His like does not come along very often.

Posted by David at 10:27 PM | Permalink | Comments (0) | TrackBacks (0)

Here is the "presentment" by the statewide grand jury meeting in Harrisburg. It is 75 pages long. About 4/5 of it is about how successful the Democrat political organization was in the years leading up to retaking control of the House after the 2006 election. What you should remember is that the acts themselves aren't illegal. What could be illegal is how they were paid for. Was it taxpayer money, which would be illegal, or political contributions from individuals?

The last fifth of the document concerns the sort of political corruption people are more accustomed to in Pennsylvania: using taxpayer money to pay staffers to do purely personal work for an elected official, and hiring a "ghost employee" who gets paid for little or no real work. This part has the Monica Lewinsky/cigar moment of the grand jury's presentment.

Posted by David at 07:56 AM | Permalink | Comments (2) | TrackBacks (0)

The indictments of 12 Democrats on political corruption charges were announced yesterday in Harrisburg by Pennsylvania Attorney General Tom Corbett, a Republican.

I have no illusions when it comes to the possibilities for political corruption in Pennsylvania, once considered the most corrupt state in the union. But I also have no illusions about the current crop of Republican prosecutors across the nation, who have shown time and again that they are willing to put people in prison to achieve political ends. The imprisonment of former Democratic Gov. Don Siegelman of Alabama is the most notorious example, but there are many others. Not all prosecutors appointed by the current Republicans are political animals, but how do we know which ones aren't? Are Corbett's deputies dispassionate professionals or hard right Federalist Society ideologues with an agenda?

Corbett's investigation, which he insists looked at Republicans, too, began after the Patriot-News reported in January 2007 that bonuses awarded to Democratic staffers in the Legislature may have been tied to work done in the 2006 campaign. It was a good story. But were the tips that brought it about motivated by true outrage over misspent taxpayer dollars? Or the start of a Republican campagin to retake the state House of Representatives, which they narrowly lost to the Democrats that previous fall after years in control?

Corbett wasn't the first attorney general to hold a press conference to announce indictments. But given the current atmosphere in the country, he would have gone far toward reassuring the public that this wasn't a political witch hunt if he hadn't had blown-up photos of the people indicted up on the stage for all to see, with his own name prominently displayed at the bottom. And one small note of levity: when I see Corbett, I can't help but think of actor Leslie Nielsen.

It is so crucial to keep politics out of criminal investigations because the power to indict is the power to destroy. I look at those photos and see, not criminals, but people who you'd run into at the fitness center, grocery store, or Senators game. Whether they are found guilty or innocent, each of them will owe tens of thousands of dollars, possibly over a hundred thousand dollars, in legal fees. Their lives, and those of their families, will never be the same. Guilty or innocent.

Posted by David at 07:44 AM | Permalink | Comments (0) | TrackBacks (0)

In 1973, Congress, fed up with the Vietnam War and especially Republican President Richard M. Nixon's invasion of Cambodia in 1970, passed the War Powers Act. The law, enacted over Nixon's veto, requires the President to consult with Congress before committing U.S. forces to war and to seek Congressional authorization for the war within 60 days. If not, the troops are supposed to come home. If war is authorized, the President must report back to Congress on the course of the conflict at least every six months. Congress can cut off funds for a misguided war by majority vote.

It made sense then and it makes sense now. There are common-sense exceptions for attacks on the United States, but the law is supposed to prevent a President from launching wars-of-choice like Cambodia overseas. If he can persuade the Congress to authorize a war, as George W. Bush snowed Congress into doing for Iraq in 2002, he can still go to war. And Congress members can be held accountable for their votes, as Sen. Hillary Clinton was during the Democratic primary campaign.

But now a group of our supposedly wise elders, led by, get this, James Baker and Warren Christopher (see Florida, 2000), wants to "reform" the War Powers Act so lawyers like themselves will "respect" it. Question number 1 is who appointed Warren Christopher to represent the American people? After his weak, pathetic, playing-fields-of-Eton performance in the 2000 Florida recount fiasco (see the excellent film "Recount" on HBO) where Baker and the other Bush people arguably stole the election from Al Gore and gave us eight years of Bush. I don't want him anywhere near something as important as the War Powers Act. This is a bad joke.

For that matter, I don't see anyone on the "commission" appointed by the Miller Center for Public Policy at the University of Virginia to pursue "reform" of the War Powers Act who is remotely left-leaning or liberal. But the other side is well-represented. They get Ed Meese, but where's our Dennis Kucinich? If a commission with fair representation of the left came out with a recommendation to get rid of the War Powers Act, I would at least listen. But not to this bunch of Bush enablers.

Baker and Christopher propose a "War Powers Consultation Act" that would supposedly require a President to consult with specified members of Congress before going to war. But instead of automatically stopping a President's foreign adventure if the Congress fails to give approval within 60 days, the war would continue unless Congress acts on its own within 30 days. Kind of like one of those deals where a business charges you for something and won't stop charging you unless you object and wait on hold in voicemail hell for an hour. A vote to cut off funds for a war under the new Christopher surrender plan would require a two-thirds majority. Ask yourself this: do you really think Bush would have sought the Iraq War Resolution without the War Powers Act in place?

I frankly doubt this is going anywhere, but it shows the fragility of the legal protections the left has won for America in the past 40 years. Bush and his people--and McCain and his--would take them away if they could.

Posted by David at 07:53 AM | Permalink | Comments (2) | TrackBacks (0)

So warns the Wall Street Journal. And why should it stop there? We're in the middle of a perfect storm of declining supplies, increased demand from China and India, a continuing fear around the world that the Bush Administration will attack Iran, and rampant speculation on Wall Street that apparently has been great for some pension funds but which is killing everybody else.

And of course, there is little to no chance of the Bush Administration doing anything beyond proposing more drilling--which might lower the price of gas in eight or nine years, but then again, might not. Not until (oh, let's go out on a limb) President Obama takes office in January is anything likely to change. In the meantime, a lot of poor and lower middle class people are going to spend the winter without any heat.

Posted by David at 06:31 AM | Permalink | Comments (0) | TrackBacks (0)

I ran into Fran Mansberger while picking up some groceries with my wife at the Weis Market in New Cumberland this past Sunday. Fran is executive director of the Industrial Energy Consumers of Pennsylvania, whose members are the steel mills, cement plants, hospitals of the state. In other words, places with really big electric bills. A large steel mill can use as much as 750 million kilowatt hours of electricity per year. My own home, by comparison, uses about 16,350 kwh in the same period. You get the drift.

Fran said the big players in the state economy are worried about the coming expiration of electric rate caps in Pennsylvania at the end of 2009 and 2010. In relative terms, it will be as bad or worse for them as for homeowners. She sent me some numbers when she got home, grocery carts not yet being equipped with Internet and e-mail. She also offered to send a blueberry recipe she liked, having noted the four pints in our cart that were destined for a pie and general good eating.

Anyway, I looked at the numbers she sent and saw her point. Depending on who their local utility is, the large industrial customers are looking at post-rate cap increases ranging from a minimum of 45 percent in the PECO Energy service territory around Philadelphia all the way up to 136 percent in the Allegheny/West Penn Power territory that includes State College. PPL industrial customers are looking at a 72 percent increase, Met-Ed industrial customers about 97 percent.

In real terms, that large steel mill I mentioned can expect to pay an additional $30.7 million per year in the PPL territory and $37.1 million if they are Met-Ed customers. A typical hospital, Fran said, which uses 70 million kwh per year, would pay PPL another $2.9 million and Met-Ed another $3.5 million. A mid-sized industrial facility using 35 million kwh per year would pay PPL another $1.4 million and Met-Ed another $1.7 million.

That's money going to a few large and already quite profitable electric utilities and their shareholders instead of into plant improvements and employee wages and benefits. The electricity doesn't get any better. It just gets way more costly. Which is why Sen. Fumo and some other members of the Legislature are talking about finding a way to limit annual increases to 5 percent or less.

Perhaps in response to these numbers, PPL yesterday send out a news release offering to help industrial customers manage and reduce their power bills during periods of high demand and congestion on the transmission lines. Prices typically soar at these times. The release didn't detail how this would be accomplished. But clearly, the utilities are worried about big customer backlash.

Posted by David at 09:25 PM | Permalink | Comments (0) | TrackBacks (0)

Say what you will about Sen. Vince Fumo, D-Philadelphia. He has his faults, but he has a real interest in protecting telephone and now electric consumers from the large corporations which dominate these crucial industries in Pennsylvania and elsewhere.

While too many legislators think of utilities mainly as nice companies who donate money toward a community park or whose lobbyists treat them to a round of golf, Fumo sees them for what they are--profitable businesses who stand to get a lot more profitable if, in the case of electric companies, the rate caps currently protecting Pennsylvania citizens and businesses from huge rate increases are allowed to expire.

This is a fair issue for the General Assembly to address. Pennsylvania is facing an enormous wealth transfer after 2009 and 2010 from citizens and businesses large and small to a few large and already profitable electric utilities and their shareholders. PPL Corp. of Allentown, which serves the part of central Pennsylvania where I live, has reported to the SEC that it expects its profits to zoom by more than $800 million in 2010, the first year after its rate cap ends. Right now, PPL says customer bills will rise about 35 percent, but that number has been creeping upward. Because electricity is a vital commodity that fuels nearly everything in our modern economy, directly or indirectly, the increase will be hugely inflationary.

Fumo, accompanied by fellow Democrats Sen. Lisa M. Boscola, James Ferlo, and Sean Logan, called the utilities "greedy" and urged his fellow legislators to create a new system whereby electric rates could go up annually by the rate of inflation or 5 percent, whichever is less. Fumo posted a lot of good data on his website about the rate caps and how they came about. If you have PowerPoint installed on your computer, the slide presentation is particularly good.

Unfortunately, the rate cap issue is one that is hard to quickly explain to the public, and even moreso to the average legislator. You can't explain why rate caps were necessary and why they ought to continue, at least with any degree of accuracy, in a quick soundbite. If you try to explain why the structure of the wholesale power market is unfair to consumers and real competition won't ever develop, your listeners will be nodding off after about 20 seconds, before you even get to the fascinating and crucial issue of locational marginal pricing. Quick! The NoDoz!

On the other hand, it is an easy issue to oversimplify. Power industry spokesmen are fond of fitting their arguments into a conservative "government is dumb" mold that probably resonates with Limbaugh types. ''Government" capped electric rates since 1996. Of course prices are going to go up you foolish consumers! Yes, and they leave out the part about how in return for the rate caps the utilities collected billions from their ratepayers for investments like nuclear plants that supposedly would be uneconomical under competition, but which in fact are cash cows now.

Fumo and his allies won't likely be able to put through their permanent rate cap--more accurate a limited rate increase--plan unless the Democrats recapture the state Senate this fall. And maybe not even then. I've found over the years that on utility issues, party labels don't mean as much as they do on other things.

Posted by David at 08:11 AM | Permalink | Comments (0) | TrackBacks (0)

I've long predicted that as the end of electric rate caps for the largest utilities in Pennsylvania drew closer, members of the General Assembly would begin to get anxious and look for ways to forestall or even prevent what will be a massive wealth transfer from the public and businesses large and small to a few large corporations and their shareholders. Rightly or wrongly, that is what it will be, and the consequences will be immense.

Today at 11:30 a.m., several Senate Democrats, led by Sen. Vince Fumo of Philadelphia and Lisa Boscola of Lehigh County, are holding a news conference in the Capitol Media Center about the end of the rate caps and what it will mean to consumers.

Rate caps were part of the deal for electric competition that the General Assembly approved in 1996. As each of the state's electric utilities were restructured for competition, they had their rates capped in exchange for the right to bill their customers for their so-called "stranded costs"--assets like nuclear plants that it was wrongly assumed would lose value under competition. You've been paying for those "stranded costs" since the late 1990s, even though their value has soared in many instances. So don't shed a tear for the utilities. They gave as good as they got.

PPL's generation rate cap will end Dec. 31, 2009, while those of PECO Energy, Metropolitan Edison, and Pennsylvania Electric will end Dec. 31, 2010. When rate caps ended in Maryland and Pike County, Pennsylvania, in 2006, electric rates shot up by about 72 percent. Pike County, served by a tiny electric utility owned by New York's Con-Ed, had a rate cap expiring at the end of 2005. I won't get into everything it did wrong in this column, but consumers, the school district, and small businesses were devastated. And it could happen again.

PPL has estimated in an SEC filing that its profits in 2010 after its rate cap ends will soar by more than $800 million. PECO, Met-Ed, and Penelec (the latter two are owned by FirstEnergy Corp. of Ohio) haven't released a similar figure, but you can be sure their profits will be about the same. They've all been doing quite well under rate caps--PPL has reported record profits by and large. It is a fair question whether they need the extra income when it will pose so much harm to the state's economy. It is also a fair question whether the genie can be put back in the bottle at this stage.

But the General Assembly will try, or at least make noises in that direction. Stay tuned.



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