In the comments to the Political State Report on the recall, ltobserver asks whether the FERC decision (that energy companies manipulated prices) proves that Gray Davis was right all along. The answer is "I don't know" and I think we're going to need to play out a little more to find out. Still, it's a fair question.
This article in the Sacramento Bee states that the state bought $44 billion in longterm contracts in 2001. Since then, half have been renegotiated for a $5.4 billion savings. So, at first glance, it appears that even if we renegotiated all of them, we'd save $11 billion, only a third of the current deficit.
However, that doesn't tell even a smidgen of the story. What time period is the savings over (these are longterm contracts). For all I know, these are ten-year contracts and we're only spending $4.4 billion a year and the contracts aren't even a portion of the budget problem. On the other hand, maybe they're overpriced by far more than that and what we've been able to renegotiate doesn't reflect just how much we've been gouged.
Clearly, more research is in order but it's 2 am and I really ought to sleep periodically. The Calblog twins are scheduled to be altar servers at the 7:30 am Mass.
Before I go, allow me a swipe at the idiots on FERC. Politics has taken over this game. The two Republicans decided not to force the repricing of contracts despite the price-gouging because of the "sanctity" of contracts. Now, I am front and center on that sanctity of contracts bit but, c'mon, illegal price-gouging that you agree exists pretty much cuts out the sanctity. The only Dem on the panel of course disagrees with the two Republicans on the panel. The Democratic lawmakers are outraged (as they should be) at the FERC decision and the Republicans are silent. What an embarrassment.
UPDATE: Dan Walters in the Sacramento Bee does this analysis today and does not come out in Davis' favor. Apparently Davis is demanding $9 billion in refunds from FERC. Even if FERC swung his way, we'd still be in a world of hurt.
Posted by Justene Adamec at March 30, 2003 02:05 AM