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California and the West | ON CALIFORNIA / PETER H.

A Lesson for Energy Deadbeats

February 04, 2001|PETER H. KING

If no other good comes of it, the energy mess at least has provided Californians with a remarkable demonstration of how to behave the next time their favorite utility comes to shut off the power for lack of payment. For those who have not experienced this peculiar humiliation, let me describe how it works. Don't ask me how I know. I just know.

Let's say it is late on a Friday afternoon in August. A pickup truck pulls into the driveway. It is painted in the soft, environment-friendly hues of Pacific Gas & Electric Co. A young man walks to the front door and rings the bell. He does not smile. He does not engage in banter.

"I'm from PG&E," he announces. "I am shutting off your electricity for nonpayment."

Now, in crises such as this, couples will show the strength of their matrimonial bond. They will stand side by side. They will stick together.

"My husband," the woman at the door blurts out.

"He must have forgotten to pay the bill."

The utility man only stares. This blank stare no doubt has served as his final answer to every excuse imaginable. He does not want to hear about forgetful husbands, or the fish in the aquarium, or the food in the refrigerator. He will not be moved by mention of children or dinner parties. He mutters something about a number to call and disappears around the side of the house. In a few seconds there comes a singular whumping sound, and then everything goes strangely quiet and still.


Next there is the awkward business of borrowing the neighbor's telephone. There is the telephone call itself. The utility operator demonstrates her own icy discipline. Yes, she will accept credit card payments, but only with a deposit of several hundred dollars. It will be returned after many months.

"When will they restore power?"

"All we can say is that it will be within 24 hours, as required."

Again, not a whit of compassion. There is more at work here than a mere straightening out of accounts. This is an exercise in behavior modification. This is customer re-education camp. Deadbeats, repeat: no payment, no power, no excuses.

And why not? It seems fair enough.

Now, though, comes the strange part.

In the last month, Californians have played witness to a monumental role reversal. The state's two big utilities have been the deadbeats standing at the door, confronted by wholesale energy suppliers that they owe massive amounts of money for power already bought and consumed: $140 million here, $600 million there, and on into the billions. In other words, a significant husband-forgot-to-pay problem.

Their responses in some ways have sounded familiar: Give us some time to work things out, but keep sending us power until we do. We really are good corporations. It wasn't our fault, really. The utilities, though, have gone far beyond the normal dance of the deadbeat. They make no bones about owing the money. They simply refuse to pay it. They won't pay the big companies. They won't pay the little 20-prop wind farms. They even refuse to tap into available cash on hand, saying that they need these stockpiles for other purposes. Try running that one by the man at the door.


The utilities argue that they should not be forced to pick up the tab for California's bungled deregulation plan, even though they helped draft it. That they made goo-gobs of money in the first couple of years of this program they apparently consider irrelevant. They insist, moreover, that their affiliate companies--flush in part because of money raised through deregulation--should play no role in paying down their debts.

And so they simply aren't paying, at least not now. Instead, they stand in the doorway and tell the cutoff man to get lost. Of course the language is not quite that blunt. An Edison news release last month made it all sound rather bland: "SCE has temporarily suspended payment of certain of its debt obligations and purchased power agreements," and so forth.

And two weeks ago, a PG&E lawyer sat at a conference table in a San Francisco courtroom, encircled by lawyers from various suppliers the utility owes money to. They had come to fight PG&E's request for a court order that would keep them from seizing utility assets--the moral equivalent, in this case, of turning off power for nonpayment.

The PG&E lawyer stayed cool throughout, sticking to what proved to be a winning line: "We prefer," he told the hearing officer, again and again, "to preserve the status quo." Maybe this is the magic sentence. Maybe this is what the man at the door was waiting to hear that dog day in August. Next time they come to turn off the electricity, if there ever is a next time, here's what we say: "We prefer to preserve the status quo." I'm sure it will work.

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