Salon’s Joe Conason is the latest writer to mythologize Los Angeles’ public energy utility.
The myth is that the city’s Department of Water and Power never went private and therefore avoided all of the mistakes of the market, blah blah blah. The reality is a bit more absurd.
As part of the bizarre restructing of electricity markets in California, municipal utilities retained the right to buy federally subzidized hydroelectric power from the federal government at rates that are far below the spot market-determined prices that the private utilites have to pay.
So the utility has been buying cheap, subsidized energy from the federal government, and then selling it back to California utilities at the spot price. California might as well have given them the right to print money. According to a Los Angeles Daily News report, the LA Department of Water and Power earned $100 million so far this year alone from such sales.
The DWP also has some of the common sense advantages that were taken from private utilities such as the ability to enter into long term contracts for power that allowed it to maintain low long term prices for power for LA residents.
If a private company acted as brazenly as the DWP has, folks like Consan would be outraged at such naked profiteering due almost entirely to government subsidies. Instead this ripoff of taxpayers is held up as a model way of running a public utility.