There was applause from environmentalists when Gov. Jerry Brown and the state Public Utilities Commission late last month accepted a $120 million settlement from NRG Energy, Inc., for the part it and the bankrupt former electric generator Dynegy, Inc., played in the power crisis that afflicted California 11 years ago.
To be paid over four years, that settlement will see NRG spend 80 percent of the money on a network of electric car charging stations along major highways and in the state’s biggest cities. Only 20 percent will go to consumers in the form of very small rate reductions.
Few questioned any of the deal, even though electric customers bilked during the crisis will get mere pennies back for this part of the many dollars the cheating Dynegy stole from them. (New Jersey-based NRG six years ago bought out Dynegy’s interest in two California power plants. Dynegy paid consumers $281 million in a previous settlement.)
Despite numerous attempts to get his explanation, Brown has yet to offer a rationale for spending most of the money on charging stations rather than refunding it to myriad cheated customers. The best his office has offered was this from spokesman Evan Westrup: “$100 million to expand the state’s clean energy infrastructure is good news for all Californians.”
Altogether, Dynegy caused an estimated 10 percent of the $9 billion in overcharges California electric customers paid during the crunch because of illegal market manipulations by Enron, Dynegy, Reliant Energy, Williams Energy, Mirant and other firms, most of them based in Texas. Including this settlement, it has paid back about $400 million.
So Brown endorses a deal that gets consumers little, while leaving Dynegy’s successor the owner of 200 full-service charging stations. Another 1,000 smaller charging facilities will go into commercial buildings and apartment or condominium complexes.
The best explanation of why this money will go to electric car chargers comes from Frank Lindh, the utility commission’s general counsel. In a telephone interview, he said refusing this settlement would risk eight more years of legal wrangling, with the possibility Californians could end up with nothing.
The chargers, he said, are what NRG offered, “and I think it’s the best we can do here.” For sure, the Federal Energy Regulatory Commission – which would hear any further case – has never approved a full refund of illegal gains by any electric generating company.
Meanwhile, the new chargers will likely spur more use of electric cars in California. The question is whether the PUC should have pressed its refund demands or accepted this kind of subsidy for a new sort of infrastructure. No one ever subsidized America’s gigantic network of gasoline stations. No similar largesse is yet going to anyone building hydrogen fueling stations for what many believe will be a coming generation of H2-powered cars and trucks.
It’s certainly possible to see this use of money as a form of theft. In virtually any other settlement for corporate wrongdoing, most of it would go back to those who were cheated. Residential ratepayers saw their monthly electric bills rise by an average of more than $10 per month during and after the crisis of 2000 and 2001, when then-Gov. Gray Davis was essentially blackmailed into accepting electric power supply deals at exorbitant prices rather than risk years of blackouts and brownouts. That was what the crooked generating companies threatened in their heyday, before many of their executives were later convicted for their complex cheating.
It’s also true that today’s limited number of electric car and plug-in hybrid models sell for many thousands of dollars more than comparable gasoline-powered cars. So cheated ratepayers will now subsidize the wealthy who can afford those cars.
Complained Steve Frank, the former head of the conservative California Republican Assembly and a persistent Brown critic, “(Brown) has stolen $100 million belonging to the people of California to buy a wasteful, unneeded personal toy… Brown has decided to misuse our money for his bad dream policies.”
Actually, Brown didn’t arrange the NRG/Dynegy settlement, even if he did announce it in the same press release as his executive order demanding that state officials work with private companies to get 1.5 million electric cars on the road by 2025. The PUC did that.
But Brown appointees, like Air Resources Board Chair Mary Nichols, hailed the action. “This…will clean our air, lower greenhouse gas emissions and reduce our dependence on imported oil,” she said. Added PUC Commissioner Mike Florio, a former consumer advocate, “This creative deal…propels us down the road to a clean transportation future…”
But the people who were cheated will not be repaid by this settlement. The bottom line is that no one will ever know if Lindh and the PUC are correct about this being the best that could be done.