Sounds like he just wants to fix another dumb move of the Davis administration - and make sure voters think Davis had a hand in their "raw deal" (which he did, but read on).
If you go to market to lock in electric rates for the long-term and you do so at the top of the market, you tend to look dumb when it becomes clear that WAS the top. The buyer then tries to blame the sellers, saying they cheated him.
The private industry equivalent would be a company panicking at the sight of spiking interest rates and rushing to market to borrow huge sums for fear rates will keep going higher. When he realizes he leveraged up at the top of the rate cycle, he blames his lenders for gouging him on the rates.
Funny thing is that, as anyone who has ever contracted with state or muni governments knows, legislatures must appropriate funds annually, even for "long-term" contracts. Such contracts have what are know as "non-appropriations clauses" that allow then to terminate the contract should funds not be appropriated for the next year. I'd be shocked if these contracts did not include such a clause.
Any Californian lurkers know if CA's constitution allows the administrative branch to cut the legislature out of the loop on appropriations? I'm not a lawyer, so I can't be 100.000% sure - how 'bout 99.999%?
Anyway, Riordan and the WPTF conference participants, I'm sure, know that these supply contracts are really one-sided lock-ins of rates. Suppliers are bound no matter how high rates go, but if they fall, the state gets to say "gimme a better deal." That's life.
Bob |
