|Photo by Debra DiPaolo|
As a summer of rolling blackouts looms, some of Californias biggest and wealthiest corporations are pleading to the state Legislature for exemptions to keep their lights on. Big oil has warned that if refineries shut down, gas prices will climb. Water agencies have said that if their pumps turn off, spigots will run dry. Hospitals, fire stations and nursing homes say lives are in the balance. Meanwhile, Los Angeles County has lobbied for emergency legislation that would allow it to buy relatively cheap and genuinely reliable power from its neighbor, the city of Los Angeles and avoid being forced to choose between paying for electricity or paying for essential services.
So far, however, just one bill has had any success in Sacramento.
Universal Studios persuaded the state Senate to adopt legislation that will allow it to avoid rolling blackouts and, potentially, lower its energy costs by switching its service exclusively to Los Angeles municipal utility, the Department of Water and Power. The entertainment giant is in Universal City, a virtual island of unincorporated county territory, a small portion of which is just inside L.A. city limits. Universal City has no residents, and its 450 acres are almost exclusively devoted to the studio, CityWalk and the amphitheater. The unincorporated part has remained a literal no mans land a useful way to avoid more stringent city land-use policies and business taxes.
Nonetheless, Universal gets five megawatts of power from the DWP, with a larger portion of its electricity furnished by Edison but that dual supply makes it subject to skyrocketing prices and blackouts. According to S. David Freeman, senior energy adviser to Governor Gray Davis, Universal (and former DWP chief) had a deal with Edison for uninterruptible power, but it started getting interrupted. This hardly suits the smooth-running image Universal touted for its flagship enterprise, CityWalk, a new and improved Los Angeles, necessary because reality has become too much of a hassle. Now, with the help of Senator Sheila Kuehl, whose district includes the studio complex, the company that fabricated a theme-park version of the real L.A. can keep the machinery of urban cleansing going, glitch-free, by plugging a second extension cord into the power supply of the dystopia next door it so freely mocks.
This bill was sort of the Hippocratic oath of voting, Kuehl says. Nobody could think of what was bad about this. It was more of a public-safety issue with the rides. Kuehl, who received a $2,000 campaign contribution from Universal last October (the largest sum given to any state legislator last year by the company), says, Stability was more important to Universal than money. They are genuinely worried about blackouts at the theme park. You wouldnt want to be on a ride when the power went out. The safety factor alone is of concern to them.
Although the DWP took no position on Kuehls bill, spokesman Randy Hough says, They want to be immune from blackouts. But you can easily follow the logic: Magic Mountain and Disneyland might come to the Legislature and make the same argument about safety.
The bills chances in the Assembly, where it is viewed as competing with L.A. Countys bid for DWP electricity, are less rosy.
When Universal last went to Sacramento concerning deregulation, in 1996, it was among those mega-corporations pushing for an open market in electricity. Universal was convinced that free-market power from Edison would be far cheaper than L.A.s municipal power. The studio saw deregulation as an exit strategy with no apparent downside. (Universal did not return the Weeklys calls.)
Such departures were what David Freeman, then the head of the DWP, came to fear the most from deregulation. Cherry picking, as he called it, might rob the DWP of its largest industrial and commercial customers, lured away, like any bargain hunter, by lower prices. About a year and a half after the ill-starred legislation was signed by then-Governor Pete Wilson, Freeman told the Weekly that the citys residential customers might watch helplessly as their energy bills escalated because a shrinking ratepayer base would be stuck with the departments fixed costs. Even if L.A. residents could bolt to another, less expensive utility, as taxpayers theyd still be forced to pay off the DWPs debts, incurred to build generating capacity, transmission lines, substations and the rest of the power divisions infrastructure. Deregulation was, in Freemans view, a stealth missile aimed straight at municipal power.
It backfired, massively. And now that it has, Universal Studios wants to befriend municipal power. Kuehl claims that this is risky, too. In a year and one-half, when all of these new power plants come online, and the state starts exercising its power contracts, DWP power might become the more expensive choice. Kuehl says that once Universal opts for the DWP, her bill prevents them from switching back.
What is to keep them from going to the Legislature if theyve bet wrong again? I suppose they could, and maybe people wont care, Kuehl concedes.
Get the This Week's Top Stories Newsletter