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Posted on 04/23/2002 9:09:24 AM PDT by Ernest_at_the_Beach
Edited on 04/14/2004 10:05:09 PM PDT by Jim Robinson. [history]
Savings could transfer to customers, send sign that the state's ready to negotiate, but actual effects are unclear.
SACRAMENTO -- Agreements announced Monday between the state and energy companies to renegotiate cheaper prices on billions of dollars worth of long-term power ultimately could affect ratepayers' bills and let other power companies know the state is serious about bargaining, experts say.
(Excerpt) Read more at ocregister.com ...
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Not mentioned in this article is the fact that in order to renegotiate these contracts, Davis agreed to drop all claims for overcharging in the past.
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No sh!t the state is willing to negotiate. We signed contracts worth up to 5 times the going price for electricity!
I say this all the time, I will repeat it here. Never, ever, ever can a politician outsmart a good businessman. The businessmen will always have the upper hand, because they know their business better than the politician, and the politician has pressing needs that the businessman can outlast and manipulate to his advantage. That is why it is foolish for the state to ever try to run businesses and negotiate with businesses like we did with the power companies. We were doomed from the beginning.
So what's that, about a 4% cut in the duration of the contract?
That's sort of like standing on a step ladder to get a better look at the moon.
Bad enough we're 'saddled' with a few years worth of Gray's 'bumbling' as it is.
Gov GRAY to the energy companies: "You give me $3 today and I'll give you $6 for the same out-year energy after I get re-elected."
Energy companies: "Sure, Governor Gray, we already are more than the $3 ahead anyway." By the way, Gov., how'd you come by the nickname, 'DOOFUS', anyway?
Raw deal on energy? Even worse deal on Davis. Time to renegotiate the 'Doofus' contract.
An electric utility trade association publication discussion of the renegotiated contract features
As Paul Harvey would say, and now for the Rest of the Story.....
You have a way with words, I was thinking that that had to be worth quite a bit to these folks.
Any idea if Calpine is going to build all those peaker plants or if they have the money to?
I think the better question, has to do with the "regulatory climate" in California. By that I mean both the environmental regulatory climate, i.e. does a permit mean there will not be additional environmental challenges during construction. I also mean the climate by which DWR is forced to honor its contractual commitments. If the market views the contracts that are backed up by power plant revenues as not worth the paper they are written on, Calpine will have a hard time getting money. If contracts are viewed as solid commitments, then Calpine can use them for financing. Gov Davis and Lockyer by trying to find any litigation excuse to break the contracts have done a lot of harm, but by "negoitating a settlement" and dropping litigation they have mitigated the damage they did earlier.
The short answer is that I think Calpine will have some problems raising capital as the state's credit rating will be the ultimate backstop on Calpine's money and I don't expect the State to keep their credit rating unless they raise taxes, which I don't think Davis and others running for re-election will allow to happen.
Looks like they got concerned that some of the plants were in danger of not getting built!
And they came down hard on the High Desert facility for one!
Do I read that right?
If prices stay constant, you would have saved $225,000:
$1,000,000 - $250,000 (cost under contract) + $25,000 (new cost) = $ 225,000 savings.
Of course prices never do stay constant.
In short, you are gambling that after 10 years we will have solved this problem. Of course it's not a gamble for Davis, since he won't be in office then no matter what. (Thank goodness for small favours!)
Unfortunately, however good this may look for some people, it doesn't help our present situation in the least.
Anyone know what percentage of the current budget deficit is explained by the power crisis? I thought the whole mess cost us about $12 billion, and yet we swung from an $8 billion surplus to a $22 billion deficit - and I believe bonds were issued to pay for some of the electricity costs. So where'd that $30 billion go? That's about 37% of the whole state budget, if my memory serves - wasn't the whole thing about $ 79 billion? What was Davis thinking when he increased spending that much?
D
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