Regulating Change

Bush will likely gut national health and safety regulation; local liberals screw up regulation by forgetting its purpose -- protecting the general public

Housing construction "expanding into rear yards often takes away light, air, and livability for people next door," she said, adding that new housing along commercial strips might be allowed, but "should be met with additional protections for side streets."

Only in San Francisco, where racist, no-growth neighborhood associations are bizarrely treated as though they embody liberal ideals, would a progressive manifesto include protecting the airiness of rich homeowners' yards.


In California, state regulators are routinely scolded by EPA auditors for letting egregious polluters off with a wink and a nudge. Clean water supplies are threatened by creeping sprawl. More and more species of birds and fish are becoming endangered thanks to dwindling habitat. And in a month the family members of those 88 people bound for San Francisco on Alaska Flight 261 will commemorate a year's passage since their relatives died, perhaps needlessly, perhaps as a result of lax FAA oversight.

The next four years are going to be a beleaguered time. In Texas, under Bush, "the government became the client of the big polluters," says former Texas Assistant Attorney General Terry O'Rourke, a devout Democrat who, nonetheless, knows Bush from college days. "They changed the language at the Texas Natural Resources Commission to "customers'; they had a customer relationship with the polluters. The question became, "Who were the customers?' And they sure as shit didn't treat the citizens that way."

Of all the places that might prove a bulwark against the coming brutish age, you'd think it would be San Francisco. But I fear we don't quite understand what rules are for.

The Power Solution: Let PG&E Go Bankrupt

Is it just me, or do the last week of newspaper stories announcing the possible bankruptcy of PG&E seem to be strangely wanting?

Electricity restructuring didn't work out quite like the huge utility had hoped. Market forces eroded the company's profitability, and it now risks having its debt downgraded, and may even suffer the possibility of becoming insolvent. This much I understand.

But where one might imagine a subsequent explanatory paragraph that says, "State officials are discussing measures to ensure an uninterrupted state power supply during bankruptcy proceedings," we see nothing of the sort. Instead, we learn that our governor and his Public Utilities Commission are negotiating to bail the company out at ratepayer expense, and that we can expect a 20 percent electrical rate hike come January.

Whatsoever happened to the "You made your bed, now sleep in it, PG&E" paragraph?

The company used hundreds of thousands of dollars in campaign contributions and lobbying expenditures to craft electricity restructuring legislation designed, at every turn, to protect PG&E from of a truly competitive marketplace. This restructuring legislation, passed in 1996, was crafted to reimburse PG&E for every bad business decision it made during the past three decades. (The boneheaded results were called "stranded costs"; tee-hee.) The legislation was tailor-made to allow PG&E to sell off all its outdated power-generating assets at inflated rates, which gave the utility millions of dollars in windfall profits. The legislation was designed in a way that effectively shut out independent distributors. Yet the company is still managing to run itself into the ground.

In any other place, this state of affairs might be seen as a wonderful opportunity to finally introduce real competition into the electricity marketplace. As the system is currently set up, the decks are so stacked in the favor of PG&E and its Southern California sister monopoly utilities that only 2 percent of Californians now get their power from independent utility producers. That's right, 2 percent. The other 98 percent still get power from PG&E, Southern California Edison, and San Diego Gas and Electric.

If PG&E were allowed to go bankrupt, and an asset auction were held, and independent power companies were allowed to buy scraps of the evil monopoly's charred carcass at pennies on the dollar, pleasant things might ensue.

For one, there would be numerous competing entities in the market, where now there is only one malfeasant one. Competing power distributors would most certainly attempt to remain competitive by selling power at low, dependable, long-term rates. To do this they would lock in multimonth power-buying deals from generators, thus creating price competition among generators, while at the same time preventing the wild price spikes the state's now suffering. Perhaps more important, those competing companies would have obtained PG&E's infrastructure at a reduced rate, and could pass those savings on to the customers.

This type of catharsis and renewal has allowed the state's economy to emerge Phoenix-like from past crises.

Indeed, California's current boom is based in no small part on the cadavers of hundreds of limited real estate partnerships and development firms that went belly up during the early 1990s. They were forced to sell their assets at reduced rates, and businesses and workers who could make good use of cheap property enjoyed a sort of low-rent protected status while they proceeded to grow enterprises that ended up resurrecting our state's economy. There are examples of this everywhere. In Britain, commuters drive through a once-bankrupt Chunnel -- subsidized by a hit taken by original investors.

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