UTILITY REGULATORS CREATING A BANANA REPUBLIC?

CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, MARCH 29, 2013 OR THEREAFTER

BY THOMAS D. ELIAS
          “UTILITY REGULATORS CREATING A BANANA REPUBLIC?”

          Banana republics got their appellation during the 1920s, when dictators ruling countries like Honduras and Guatemala made decisions on the say-so of banana growing companies, strictly for the profit of those companies – and usually at the expense of the local citizenry.

          Now it is the California Public Utilities Commission that’s threatening to make a major area of state policy-making into a new variety of banana republic. For in decision after decision since former utility company chieftain Michael Peevey took over as its president in 2002, the commission has taken care of big utilities and power producers at the expense of ordinary citizens, called “ratepayers” in utility parlance.

          One odious example is the PUC’s order forcing customers to pay most of the bill for fixing the pipelines of California’s biggest natural gas company, hopefully ensuring there are no replays of the 2010 explosion that killed eight persons in San Bruno – even though Pacific Gas & Electric Co. took “responsibility” for the blast.

          Another was the decision to let a Spanish company build the 250-megawatt Mojave Solar power project near Barstow – far outside PG&E’s service area – to provide electricity for that company. At the hearing approving this project, strongly backed by Peevey, commissioners openly asserted that Mojave Solar electricity will cost at least double the price of kilowatts from gas-fired plants. PG&E will also profit: Money from its customers will build transmission lines to carry that energy to existing lines in the San Joaquin Valley, with PG&E guaranteed profits of about 12 percent per year for 40 years on whatever those lines cost.

          Now the commission is at it again, apparently about to make another decision detrimental to customers but a boon to power producers.

          This time it’s a “peaker” electric generating plant in San Diego, not far from the Mexican border tentatively due for an approval vote on March 21. As always, the Peevey-led commission has a pretext for approving this 300-megawatt natural gas-fired plant, which would operate only when other power plants don’t provide enough juice for the region. (One megawatt supplies at least 750 homes.)

          The pretext here is uncertainty over when – or if – the San Onofre Nuclear Generating Station will restart. The problem is that the PUC’s own administrative law judge found no need for this new plant after a lengthy proceeding.

          “It is not reasonable…when there is no need for incremental local capacity until (at least) 2018…” said the administrative judge’s decision.

          One reason the plant is unneeded: By late summer, even without San Onofre, Southern California will have excess generating capacity of 30 percent, and Northern California nearly 40 percent excess. Three new gas-fired generating plants – all within 80 miles of San Onofre and with a total output close to San Onofre’s maximum 2,350 megawatts – are due to come online this summer.

          On reading the ALJ’s proposed decision and a similar one from fellow PUC Commissioner Mark Ferron, who supervised the PUC’s work on the case, former Southern California Edison Co. President Peevey asked the head of the state Energy Commission to back his claim that there is a pressing need for the new plant, to be named Pio Pico and to cost ratepayers $80 million to $90 million yearly over 20 years (about $30 per residential customer yearly).

          In a December email to a staffer, Energy Commission Chairman Robert Weisenmiller said “Peevey wants a letter from me.”

          Weisenmiller quickly sent one claiming Pio Pico is needed. The trouble is that during Energy Commission hearings in July in Chula Vista, that commission’s lawyer advised that “the (Energy) Commission doesn’t do a needs-based analysis in our – in our licensing process.” So there was no evidentiary basis for much of what Weisenmiller obligingly wrote to Peevey.

          Also during the Energy Commission hearings on Pio Pico, then-Energy Commissioner Carla Peterman declared – with no evidence to back her – that approval was justified because “we need to keep the lights on (with Pio Pico).”

          Former Rhodes Scholar Peterman is now a PUC commissioner, named to a six-year term by Gov. Jerry Brown in December. She at first recused herself from the PUC’s Pio Pico vote because she was involved with the plant’s environmental approval. But she now plans to vote.

          In an email, Peevey stopped short of explaining why he’s trying to overturn both Ferron and the administrative law judge on Pio Pico. “The PUC and other state agencies…work together on energy policy and implementation…,” he said. “The …Energy Commission some time ago approved…the Pio Pico facility… Weisenmiller told me he thought the plant was needed in San Diego, given the uncertainty surrounding…San Onofre… I told him to send the PUC a letter telling us why he thinks it is needed…”

          There is, thus, no evidence of any need, only conjecture, no facts. Which makes this look like another arbitrary PUC action benefiting big companies at the expense of customers, done in classic banana republic style.

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     Elias is author of the current book “The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government's Campaign to Squelch It,” now available in an updated third edition. His email address is tdelias@aol.com

BRUCE DAVIS SHOWS WHY SOME PRISONERS SHOULD NEVER BE FREED

CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, MARCH 26, 2013 OR THEREAFTER

BY THOMAS D. ELIAS
      “BRUCE DAVIS SHOWS WHY SOME PRISONERS SHOULD NEVER BE FREED”

          California’s Parole Board goes by the book, even when it comes to the most heinous murderers. It pretty much has to, or its decisions will be overturned by the courts, which must rule on the letter of the law.

          But not all cases fit into the letter of the law. Some crimes are so vicious that even if the perpetrators have reformed in prison, earned Ph.D. degrees while incarcerated, led prayer groups for years and otherwise been exemplary convicts, they should never be freed.

          So the decisions of most California governors to keep denying freedom to many murderers can be more than just politics, even when they’re designed to spare those governors political embarrassment.

          A classic example is Gov. Jerry Brown’s refusal in early March to go along with a decision of the Board of Parole Hearings to free two-time murderer Bruce Davis, a longtime loyal follower of mass murderer Charles Manson who did earn a Ph.D. while in prison.

          The Parole Board, constrained by laws and regulations, ruled a month earlier -- as it also did three years ago – that Davis should be released because he has served long enough, is allegedly no longer a threat to the public and has been well-behaved.

Davis, a prisoner since 1970 now held in the California Men’s Colony in San Luis Obispo, was convicted in the murders of aspiring musician Gary Hinson and movie stuntman Donald “Shorty” Shea, both of whom were literally carved up by Manson and/or his associates.

It’s difficult for those not involved in investigating or covering the Manson Family murders to appreciate their gruesome quality. Trial testimony by a former Manson follower revealed that Davis held a gun on Hinman while Manson slashed his face with a sword as Manson tried to extort money from him.

          Shea, meanwhile, was murdered, dismembered and buried on the former movie ranch of longtime farmer George Spahn in the Santa Susana Pass area between Los Angeles and Simi Valley, site of many episodes of TV shows like Bonanza and The Lone Ranger. Shea died because Manson and others in his entourage, squatters on the ranch in 1968 and 1969 while Spahn was too frail to evict them, believed he was a police informant.

Davis insisted for more than 40 years that he had little to do with Shea’s death, inflicting “only” a “token” stab wound on Shea’s shoulder. But last year, he finally admitted he in fact sliced Shea from armpit to collarbone.

          Brown’s six-page ruling reversing the Parole Board decision made this salient point: “In rare circumstances, a murder is so heinous that it provides evidence of current dangerousness by itself. This is such a case.”

          Brown has taken heat for not making similar findings in very many other cases. In the second year of his return to the governor’s office, he signed off on 81 percent of the Parole Board’s recommendations for release of killers who, like Davis, were serving life sentences.

          That’s considerably more than the 27 percent rate of Parole Board decisions upheld by predecessor Arnold Schwarzenegger and exponentially more the 2 percent release rate under Brown’s former chief of staff, Gray Davis. Schwarzenegger granted 94 life sentence releases in his first five years in office, Gray Davis just five in his five years.

But Brown’s release rate is only a few points higher than the 73 percent under Republican Pete Wilson during the 1990s. And the actual rate of release of killers under Schwarzenegger and Gray Davis approximated the rate under Brown and Wilson. In 2011, for example, California courts set free 106 of 144 prisoners whose releases Schwarzenegger had denied.

Which means governors who reverse their Parole Boards are often merely grandstanding.

          One thing could change Brown’s current practice, as it did with Wilson. That would be a murder or rape by a recently paroled lifer.

          Brown knows judges often overturn refusals to go along with Parole Board decisions and cannot afford to have his prison realignment policies, which have reduced state prison populations by more than 20,000, discredited by murderous parolees. Nor can he afford to be seen as soft on crime, as he would if he let any Manson followers loose.

          So friends say he reviews every case in about as much detail as he did with Bruce Davis. Brown releases extensive explanations for any parole board reversals.

But those friends say he tries to keep the most vicious killers – like Bruce Davis – in prison where they belong. For, as a onetime Roman Catholic seminarian, he surely knows that besides any political considerations, some crimes are simply too horrible ever to be forgiven.

         

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Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, visit www.californiafocus.net

AIR BOARD MAY HAVE IT RIGHT ON CAP AND TRADE

CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, MARCH 22, 2013, OR THEREAFTER

BY THOMAS D. ELIAS
     “AIR BOARD MAY HAVE IT RIGHT ON CAP AND TRADE”

          From the moment AB 32 and its mandate for greenhouse gas reductions passed in 2006, conservative opponents and climate change deniers have vilified it as an economic suicide pact for California.

But that may not be so, in part because of how the cap and trade system for lowering emissions of carbon dioxide (CO2) is now working.

What’s more, no one expected this to be a big state moneymaker back when current Democratic state Sen. Fran Pavley and then-Gov. Arnold Schwarzenegger were pushing it.

          But it’s turning out to be just that, in about the amounts the current state budget proposal figured on – unless the state Chamber of Commerce succeeds in a current legal challenge to the law’s fund-raising side.

          One question that lawsuit raises is just what to do with the more than $140 million raised in the first two state auctions of air pollution permits that are key to the system of gradually reducing limits (caps) on emissions. Spend it for the kind of green projects outlined in the law or set it aside in case the chamber wins? So far, Gov. Jerry Brown is coming down on the side of spending the money, but that’s not final.

          This was designed all along to let some companies keep polluting while overall statewide levels of CO2 and other greenhouse gases slowly sink to 1990 levels. Only companies that emit more than 25,000 tons of CO2 yearly are covered. So far, more than 260 are involved in the program, from oil refineries and power companies to dairies and large corporate farms.

          All those outfits last November were given 90 percent of the pollution allowances they would need to continue operating at current emission levels for the next few years. (Each allowance, or permit, lets the owner emit one metric ton of CO2). Any that reduce greenhouse gases by just 10 percent, then, will have no further expenses for years to come.

The pollution permit auctions are only about the other 10 percent that most of the big companies involved will need.

          There is strict secrecy about who’s bidding how much, too, the ARB claiming that’s so companies can freely bid on the allowances and reveal to no one but the ARB what they think it will cost them to clean up. Future planning will be based on those numbers. As in most auctions, the highest bidder wins, getting the permits it wants. The next highest bidders also get theirs, a process that continues until all available allowances are gone.

          Everyone getting allowances in the auction pays for them at the lowest winning bid level, but never less than $10 per credit. In short, these auctions minimize what the state takes in, rather than maximize it, while still giving the permits significant value. The idea, says ARB spokesman Stanley Young, is to help fight climate change by delivering the most greenhouse gas reductions at the least cost.

          Brown’s tentative 2013-14 budget forecasts the auctions will bring in about $400 million by the middle of next year.

          Testimony at three hearings staged around the state over the last few months might help Brown decide where to put the money.

          For sure, he can’t use it just to help balance the budget. AB32 requires it be spent on projects that reduce CO2. Because cars and trucks are the biggest CO2 producers in California, anything that helps take some of them off the road may qualify for funding.

So carbon permit auction money could be used, for one example, to help pay off bonds for the state’s nascent bullet train. Or to install solar panels. Or to improve energy efficiency in homes, offices and industrial plants. But probably not for education, roads or parks.

          As for cap and trade itself, no company actually has to account for its allowances until November 2014. Polluting businesses meanwhile can buy or trade for credits given to other firms last fall or bought by them since. That’s supposed to make it profitable for companies originally given pollution allowances to cut their emissions, then sell or trade some of those they got. That’s the “trade” in cap and trade.

          Only time will tell if all this will work without costing jobs and profits, especially for businesses using older equipment.

          Already, the University of California has said its spending on pollution permits may reach $28 million yearly before 2018, equivalent to the cost of educating 2,800 students at an average of $10,000. No one is saying whether that will that force some students out or cause fee increases.

          The bottom line: The first impression is that the air board probably has gotten this program right. It’s too soon to be sure whether it will work better than clumsy cap and trade systems previously tried in Europe and several Northeastern states. But the fact most businesses paid nothing for 90 percent of their pollution allowances is a real positive.

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Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, visit www.californiafocus.net

GASOLINE PRICE GOING UP; ARCO SALE COULD LIFT IT MORE

CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, MARCH 19, 2013 OR THEREAFTER

BY THOMAS D. ELIAS
    “GASOLINE PRICE GOING UP; ARCO SALE COULD LIFT IT MORE”

          Are you ready for $6-per-gallon gasoline? Then $7 a little later?

          Premium grades of gasoline already go for more than $5 per gallon in some parts of California; regular has been above $4.50 for a month at hundreds of service stations.

          There is no promise these near-record price levels will drop anytime soon, especially with summer approaching and refiners making more expensive California-specific blends for the next few months.

          But consumer advocates warn that a proposed purchase of BP’s Arco gasoline refinery and its company-owned stations by Texas-based Tesoro Corp. may cause prices to rise much more in the not-so-distant future.

          As February ended, the state’s tax-regulating Board of Equalization took the first step toward raising gas prices above even today’s levels, voting 3-2 to up gasoline excise taxes 3.5 cents, from 36 cents to 39.5 cents per gallon. This assures that even if prices come down in the near term, they will not drop to where they were before the latest big bump took regular over an average of $4.30, even at “cheap” non-branded stations. The vote was strictly party-line, with the board’s two Republicans voting no and three Democrats saying yes.

          The bump was the result of a 2010 law signed by then-Gov. Arnold Schwarzenegger (who promised, among other things, never to raise taxes), which cut the sales tax on gas from 8.25 percent to 2.25 percent, while more than doubling the excise tax to 35.3 cents (raised to 36 cents a year ago). The total tax on each gallon of gas bought here will now average just over 70 cents.

      That 2010 change allowed some gas tax money to flow to the state’s general fund, easing a budget crunch. But – combined with reduced gasoline sales due to the increasing efficiency of many new cars – it also caused a $157 million shortfall in road-maintenance money. Hence the latest excise tax increase.

          But the impending purchase of Arco from the former British Petroleum by refining giant Tesoro could pose a far larger potential threat to drivers’ pocketbooks.

          Tesoro proposes to pay $1.175 billion for Arco’s refinery, stations, pipelines and other equipment, with payment for Arco’s inventory of gasoline, diesel and other items (like the merchandise in its AM-PM convenience stores in California, Oregon and Washington) probably lifting the full payment to well over $2.5 billion at current gasoline price levels. It would leave the Arco name on most stations that now carry it.

          BP is not explaining the sale this way, but it would net a couple of billion dollars or more, likely to be used for lawsuit settlements from the huge 2010 Gulf of Mexico oil spill.

          The sale poses a threat to California prices, consumer groups contend, because it would leave Tesoro in a commanding position in the California market, even if Tesoro were to sell off its current refinery in Carson, smaller than and adjacent to the Arco facility, to appease anti-trust regulators.

          Tesoro, on the other hand, said in its press release announcing the purchase agreement that the move will have “competitive advantages” for California drivers. A company spokeswoman refused to say what those advantages might be, saying the firm can’t comment until the deal goes through.

          Tesoro currently sells in California under the USA Gasoline and Shell labels, as well as supplying hundreds of unbranded stations. The company now owns the former Ultramar/Beacon refinery in Martinez, the former Shell refinery in Carson and others in Hawaii, Washington and Texas. If this deal goes through, Tesoro and Chevron together would produce well over 50 percent of all California gasoline.

          “Who would want two companies to control more than half California’s gasoline market?” asks Jamie Court, president of the Consumer Watchdog advocacy group, which has asked both the Federal Trade Commission and state Attorney General Kamala Harris to nix the deal.

          Since 1980, the number of gasoline refineries in California has shrunk from 27 to 14. Meanwhile, California gas prices (even before the nation’s highest gas taxes) have consistently remained 10 to 20 cents above those in the rest of America.

          “Our market is geared to shortages and scarcity,” said Court, noting that a fire or other outage in a single refinery can make prices skyrocket.

          Historically, when price spikes occur, they later come down, but almost never back to previous levels. So the next spike begins at a higher level than the last one, driving prices ever upward. If that pattern continues, it has to lead to $6-per-gallon gasoline prices and higher.

          All of which means that if BP sells Arco, the FTC or Harris should insist that Tesoro not be the buyer. Maybe Exxon-Mobil, Valero or Pilot Flying J, all of which also have refineries here. But concentrating production of vital necessities in just a few hands is rarely a recipe for competitive pricing and it doesn’t figure to be this time, either.

      

     

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Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, visit www.californiafocus.net