Charged Up: Broad Coalition Forms to Oppose Prop. 9

Orange County Business Journal, Aug 31, 1998 by BRENNAN, PETER

If ever there was a case of strange political bedfellows, the campaign that's shaping up to oppose Proposition 9 is it.

Under this initiative on the November ballot, electric consumers wouldn't have to pay for nuclear power plants nor for rate-reduction bonds. And by the way, rates are promised to go down by at least 20%.

It's sponsored by Harvey Rosenfield, who is most famous for Prop. 103, the initiative that demanded auto insurance rates be rolled back. Also on his side is a public that's disgruntled and confused about deregulation. At least one poll showed 57% in support of Prop. 9, with 17% opposed and 24% undecided or with no opinion.

That may seem like a big lead, but in California political terms, it's the equivalent of a college basketball team scoring first against an NBA dream team.

And it is a dream team of political pros - who normally wouldn't be caught dead at the same fundraiser - that is lining up against Prop. 9.

There's the California Chamber of Commerce and the L.A. County Federation of Labor. The utilities naturally are opposed, but so is the Consumer Coalition of California.

The California Taxpayer Association looks on sympathetically while the California School Boards Association moans that the proposition would cost schools $62.5 million in tax revenue. Republican and Democratic leaders have taken similar stands opposing this proposition. Consumer activist David Horowitz and Gov. Pete Wilson are on the same page.

There's the California Manufacturer's Association linking arms, metaphorically of course, with the Environmental Defense Fund and the Natural Resources Defense Council.

What strange bedfellows indeed.

"I think it's reflective of the nature of the odd-bedfellow group that put together the compromise in Sacramento" in 1996 to enact deregulation, said Julie Puentes, executive vice president of public affairs for the Orange County Business Council. "After you work long and hard to put something together, when someone comes along to undo it, you have passion for this." Opponents Speak Out

Orange County opponents, including officials from the Southern California Edison, are actively speaking out against the proposition in front of groups. Already opposed are the Business Council, the Lincoln Club, the Building Industry Association, 11 chambers of commerce, the cities of Mission Viejo and Laguna Hills, and 14 local politicians.

Frank H. Greinke, who is treasurer of the Lincoln Club and who made the motion at a recent meeting to oppose the proposition, said club members are worried that it might eliminate competition and damage the state's bond ratings.

Greinke, who is also founder of Southern Counties Oil Co., a distribution firm, said it might hurt his firm's ability to enter the energy market should it decide to do so in the future. And there's more:

"My big concern is that the author of it is a former socialist," Grienke said. "When I saw Harry Rosenfield in that, it was enough for me."

Douglas Heller, campaign coordinator for Prop. 9, agreed that it's a broad alliance opposed to Prop. 9. He attributed it to effective lobbying by utility officials.

"It's unfortunate that a lot of people willing to take a position didn't contact us," Heller said.

He pointed out that utilities have given $813,000 of the $819,000 raised by opponents, as of June 30, the last reporting date. He said the proposition has received the support of the California League of Women's Voters and consumer magazines. Divvying Costs

At the heart of the Prop. 9 campaign is a fiery debate about who should pay for the state's nuclear power plants and other outdated but costly energy facilities - California consumers or utility shareholders.

Under the 1996 act authorizing deregulation, legislators decided consumers should pay, reasoning that state regulators had forced utilities to build the costly generating plants. In turn, small consumers were given a 10% price break that was financed by bonds issued by the utilities.

Businesses were promised that deregulation would eventually result in big cost savings on energy bills that are typically much higher than elsewhere in the country. Heller's campaign message is that each consumer is paying $200 to $300 extra each year for the bailout of the utilities.

Proponents of Prop. 9, led by Rosenfield's Santa Monica-based group, Californians against Utility Taxes, argue that it's the utilities that made the mistakes and it's their shareholders who should bear the costs, not consumers.

Proponents may be outgunned, but they recently scored a three-point shot over the outstretched hands of opponents when a preliminary study by the California Energy Commission estimated the proposition would slash rates for consumers. Rate Debate

The reductions could be up to 37% for Edison customers, 34% for Pacific Gas & Electric, and 24% for San Diego Gas & Electric consumers. The commission's board of directors is trying to distance itself from this study; critics say the predictions are flawed.

The opponents say Prop. 9 would be like throwing the baby out with the dirty bathwater. The carefully crafted 1996 legislation unanimously passed the state Legislature because all sides gave up some benefits in exchange for others. For example, the utilities don't have to pay for nuclear power plants and other stranded costs, but they are being forced to share the retail energy market.