... The situation in California had changed. It was no longer a regulated
energy environment in California. Is that right? ...
Lynch is the president of the California Public Utilities Commission (CPUC),
which regulates the state's privately owned electric and natural gas companies.
She was appointed to the CPUC in March 2000 by California Governor Gray Davis.
In March 2001, Lynch and the other CPUC commissioners voted unanimously to
raise retail electricity rates by an average of 40 percent, reportedly the
highest rate increase in California history. Lynch says that such rate hikes
were necessary because the Federal Energy Regulatory Committee had refused to
step in to the California market and offer relief by capping wholesale
electricity rates. FRONTLINE interviewed Lynch on April 11, 2001.
I disagree that it was no longer regulated. I believe what happened in the
Wilson administration is that the PUC commissioners handed off their historic
authority to control prices to the federal government. They created two markets
where there used to just be one. There used to just be a retail market where
the utility ... made the power and sold it to you and me and the businesses--as
just one sale--and the state controlled that retail sale.
In requiring the utilities to sell off a portion of their power plants, they
created a wholesale market. So private power plant operators sold power to the
utilities in a wholesale transaction [and] utilities resold it to you and me in
a retail transaction.
The problem now is the Public Utilities Commission can't determine whether the
wholesale cost is reasonable, because that authority was shifted to the federal
... The only real regulation taking place was the rates we paid to those
companies, those monopolies?
The state, through the Public Utilities Commission for over 60 years, would
take a look at the utilities' cost, would approve their capital improvement or
capital infrastructure plans and say, "We are going to fold those into rates
over time, and we're going to allow the utilities to make a fair profit--in
fact, a pretty stable profit--but it's going to be a profit based on provable
costs that are justified."
Now, when we're not looking at the cost of producing power, those private power
producers can charge whatever they want--and they do, because the federal
government hasn't stepped in to say, "Hey, wait a minute. The prices you
charge to the utilities for resale to you and me have to be just and
reasonable." The feds just aren't doing their job. ...
You came into office and things seemed OK. There was no crisis when you
came into office.
I joined the Public Utilities Commission in January 2000. ... At that point,
the price cap had just been increased from $240 a megawatt to $750 that past
November. There was a price cap that was a firm price cap, and no power plant
generator or seller could charge more than that. ... The prices, although
somewhat higher than 1999, were still relatively low as compared to today.
That all changed at the end of May. At the end of May--in fact, on May
22--there was an unseasonably hot day. Power use went up some in California,
but the price of power skyrocketed--much more than the demand for that day.
That was what the Independent System Operator (ISO) called a market
A "market imperfection"?
That's what the economists say. What that means is the market didn't work,
because the prices charged for power bore no relationship to the costs produced
in that power.
So something funny was going on?
I don't think it's actually funny. I think it's pretty appalling that the
folks who sell us power can charge whatever they want. And on that day, they
did. Then, on subsequent days, they did. ... The price of power shot up from
about 5 cents a kilowatt-hour on average, to about 18 cents a kilowatt-hour on
average--more than tripling--over last summer. Now, those prices look
relatively good to today's prices, because today's prices, on average, range
from 25 cents a kilowatt-hour to 30 cents a kilowatt-hour. ...
Tell us who Harvey Morris is ... and what he came and told you.
Sure. Shortly after I came to the PUC, Harvey Morris, [who] was a lawyer at
the PUC who specializes in natural gas litigation in front of the federal
regulators, came to tell me that he had unearthed evidence of anti-competitive
behavior at the California border, essentially on gas pipelines that come in
from the Southwest into California. Some of the gas companies were
manipulating the price.
He had built a case against a particular gas producer and pipeline owner and
wanted to file suit against them. But before we can file suit against a gas
pipeline owner, we have to go to the federal administrative agency that
controls pricing and gas pipelines. Because they go through many states, they
are interstate pipelines, and the state of California doesn't control them.
The federal government controls them.
That's the [Federal Energy Regulatory Commission]?
Right, that's the FERC. Harvey wanted to file a case on behalf of the citizens
of California at the FERC, charging that El Paso was manipulating the price,
and manipulating behavior on the main pipeline into California. He showed me
his evidence. I thought it was a dead-bang, absolute case of price
manipulation. So the commission, in late March--right after I had become
president--voted to take that case to FERC. ...
Which has, so far--
... Done absolutely nothing. In fact, more than that, they've sat on the
complaint. It's now a full year since the state of California brought this
clear evidence to the federal government, and they have done absolutely nothing
with the complaint--while all of California has suffered from higher natural
In some way, did these higher prices that resulted trigger what took place
over the summer?
Not necessarily what took place over the summer, but certainly some of the
manipulation that occurred in the winter. ... When the winter came on and there
was more demand for natural gas for heating as well as for electric production,
natural gas prices spiked. But they didn't spike idly. The price of natural
gas spiked in California at the California border at the very same time that
the federal regulators were considering raising the price cap. ...
That allowed all those power producers to come into the federal government and
say, "Look. The price of natural gas has just risen dramatically. You've got
to blow the price caps off and let us charge whatever we want for the price of
electricity, because our costs have gone up."
There was no true correlation between that price spike and their actual cost
for production of electricity. There was just the assertion and that day's
prices. But the federal government pointed to that spike in natural gas prices
as partly a justification for blowing price caps out in California.
Somebody sitting at home--because many people feel this--think that there is
a conspiracy going on here between the generators and the pipeline company--the
people who have the money.
I believe that they are engaging in cartel behavior--or cartel-like behavior.
They can--through manipulating whether their power plant runs on a particular
day, and through manipulating the old system of biding--dramatically increase
the price of power, or dramatically reduce the supply on any given day, which
creates an artificial shortage, and then drives up the price power.
Your position would be, President Lynch, that it's not paranoia if the
person at home is worried that there's a conspiracy out there that's fleecing
I don't call it conspiracy. I call it rational business behavior of the people
who own a fundamental economic necessity that we can't do without. ... You and I have to buy electricity every day, and we can't store it. ...
Electricity must be used when it's made. ... So the people who make electricity
know that you and I can't just decide not to buy it today if the price goes up
too high, and they know we don't have a substitute for it. You can't just light
candles to make your computers run. So they know they have a fundamental
economic necessity that people will buy at any price, and so they charge any
price they want.
That's rational economic behavior on the part of the person who has the golden
goose, right? But it's not good corporate behavior, and it's not behavior
that's good for our economy; which is why virtually every industrialized nation
in the world regulates the prices that somebody can charge for
electricity--except for the United States federal government, which has stopped
doing its job. It's stopped regulating and ensuring a just and reasonable
Pretty tough talk from a lifelong Democrat. Democratic Party policy in the
Clinton administration put this into effect.
We don't have Democratic or Republican electricity. What we have is
electricity. It's not party-specific. Republicans and Democrats and
Independents and Green Party members all need electricity every moment of
The problem here is ideology. It was a free market ideology that enabled--or
required--the state to step back, because the market would provide. But in this
market, you don't need to be an economic Ph.D. to know that when you've got a
fundamental economic necessity that has high capital barriers to entering into
the market ... and you have a long lead time, meaning you can't just build a
power plant tomorrow, ... then you have the classic economic theory for
And when you have boom-and-bust pricing with a fundamental economic necessity,
the people who suffer are the buyers. That's why, since the 1930s or the
1920s, we have always regulated the price of electricity. ...
I can hear a corporate executive involved in this responding, because
they've said this to me--"She's only interested in retribution. That's the
past. Today, we have a crisis. The way to solve the crisis is maybe even come
back later and collect this money ... and make things even. Take the cap off
of the retail rate now. Allow prices to go up, so we don't have a bankrupt
utility. We don't have companies that are refusing to give us power or supply
raw materials like natural gas because we're not creditworthy." You control
that, they say, why don't you at least do it now?
The Public Utilities Commission, as a five-member commission, does have
authority in certain circumstances to raise rates for electric and natural gas
bills. But it's not just me. ... It's not a question of retribution. It's a
question of getting all the facts to complete the picture, so we can assess
whether or not the actions the utilities have taken in the past are reasonable,
such that we should make sure that they are financially healthy going
But make no mistake. I believe in financially healthy utilities. I believe
that the provision of power should not be left to unregulated free marketeers,
but instead, we should have utilities that are imbued with some public interest
responsibilities to make sure that you and I get electricity every day. That's
a better model than just throwing it open to the wolves. ...
I could hear someone saying you're trying to make a rational argument about
this in a sort of legal sense, but in reality, what we're dealing with here is
an economic engine which is coming apart at the seams. You won't raise rates,
FERC in Washington won't cap rates, and the people of California are caught in
the middle. ...
That just demonstrates why the folks who are in the regulator role actually
need to enforce the law. Basically, the federal government is supposed to act
as market cop on the sellers, and they just aren't. The market cop is nowhere
to be seen, and we see the effects of it. So I am, in essence, the retail cop.
My statutory job is to ensure just and reasonable retail rates for businesses
and families in California. Am I supposed to not do my job because the federal
market cop has decided not to do their job?
I agree that that puts many people in the middle. The problem is, do you want
all the cops to go away because one set of cops decided that they're just not
going to do their job anymore? Then we will experience true economic
hardship, because we will be paying 5, 10, 20 times the amount that we should
be paying for power. And if we just let everybody drive it through to the
consumer, pretty soon that really will collapse the California economy.
What if you said something like, "Let's allow them some incremental
increase, so they don't go bankrupt?"
We did that. The Public Utilities Commission--and I voted for it on January
4--said, "The California utilities are in a financial crisis, therefore, we
will raise rates on a temporary basis. In the meantime, we'll take evidence
and hear public testimony about how much the utilities need going forward..."
We are prepared to move on that ... shortly. ...
I was struck in late November, December, during the whole post-election
situation. There was [former Secretaries of State] Warren Christopher and ...
Jim Baker. Democrat/Republican, and they're both involved in all of this.
There's a lot of politics in this situation. Maybe you could explain how
they're involved and what that would mean.
I think that they are both folks who have had a long history of government
service who now sit on corporate boards of energy companies. As a corporate
board member, they have certain fiduciary duties to those companies to advance
any interest of those companies. But they're no longer directly involved in
government service. They, instead, are involved in their private activity. ...
You have to know what hats the people are wearing. You have to know where they
are interested--either from an ideological basis, or from a financial
basis--when they give you advice. I always try to hire consultants who don't
have a financial interest in the market and don't have other clients who have a
financial interest in the market, such that their advice to me, as a government
official, could be colored by their other clientele. ...
To the person at home, it looks like the power structure of America is
Yes, I think that that's obvious, but that's a smart strategy for the
companies. That's why government always needs to understand where the
advocates are coming from--what their interests are--in listening to their
viewpoints. I'm not saying we shouldn't have listened to the companies'
viewpoints. I think we should listen to all viewpoints--including consumer
groups and other business viewpoints, essentially the folks who have to pay the
price if these folks are successful in getting the prices increased.
It must be somewhat intimidating for you to see your colleagues in the
Democratic Party--people in the leadership positions--taking the positions of
the utilities, or your adversaries, in this whole process.
No, actually. Since I have represented corporate boards of directors and have
had, as a lawyer in private practice, a lot of interaction with corporate CEOs,
I think that's how business is done in America. And it doesn't surprise me,
nor does it impress me. Those people are doing their job. I'm going to do my
The fact that Enron obviously has very close ties to the president or people
in Washington doesn't surprise you?
No. I'm sure that they get their view heard in Washington better. Certainly
they seem to have their view heard at FERC more than the state of California
does, because they got the market cost to go away.
But you've called these people a cartel.
So the cartel includes all these politicians or former politicians or
No, the businesses are acting in a cartel-like manner to raise prices and to
withhold supply. But that's a corporate decision on their part in order to
make more money. That's a rational economic behavior. As the economists would
say, that's just not in the public interest. ...
What's your reaction to the reporting that the governor is engaged in these
long-term energy contracts that (a) appear not to be adequate to cover what we
need; and (b) are at long-term relatively high rates. And now it's unclear
what other deals were made. They won't even show us the contracts.
I'm not privy to the contracts either. I have not seen them, so I don't know
their terms, and I don't want to speculate about what's good or bad about them.
But the information that we do know does show that we are paying more for the
power in the long-term contracts than we would've paid a couple years ago.
That's because we're essentially buying flood insurance after it's already
started raining, and the water's at the doorstep. It's going to cost more for
flood insurance at that point in time, unless you tell the folks who sell flood
insurance that they can only charge so much.
Which gets back to the fundamental problem: The price of power that we pay for
tomorrow affects our entire economy, and that price has to be just and
reasonable. The governor is trying to safeguard the citizens of California
when he only has a few tools at his disposal, because the federal market cops
are nowhere to be found. If the federal market cops did their job, we could get
reasonable long-term contracts. In the absence, California has to do something
to keep the lights on, and that's what's been done. ...
Is this a political payback to California? It's well known that [Governor]
Gray Davis has presidential aspirations. California didn't go for Bush. In
Washington, you say they can fix the whole problem, and they just say, "We're
not doing anything. Let Davis live with it."
But that is not just so in 2001. Jim Hoecker, as the former chair of the
Federal Regulatory Energy Commission, was also not inclined to assist
California. In fact, it was under Jim Hoecker that the FERC totally blew out
price caps or any semblance of consumer protection for California businesses
and families and, by the way, for California utilities. ...
You may be sitting on your cap and saying, "I'm a friend of the consumer.
Look, I'm not raising rates." But the taxpayers are paying for it one way or
another. ... The argument of Enron or others in PG&E is that, if you had
taken the cap off back in September, rates would've risen, people would've
started conserving, more power plants would've gone online or stayed online,
and you wouldn't have this problem.
The power companies are proving my point, which is [that] they withheld power
to keep prices up. So they waited to try to push the regulators to make those
prices go up, and then they'd produce.
You believe they took plants offline?
Yes, in order to create a shortage in the winter, because California has plenty
of power capacity in the winter. To put a number to it, we only use about
roughly 30,000 megawatts a day at peak of power in California in a winter day.
We have 41,000 megawatts available in California--power plants ready to run.
So we've got a big cushion on any given day.
But what happened starting in December, and continuing through January and
February, is the folks who could run, didn't run--dropping the available amount
of power down to--imagine this--just below what our power needs were, creating
an artificial shortage and driving prices up.
You have evidence of this?
... We do have some evidence of that, which I really can't speak to until we
take legal action on. But yes.
We can expect legal action?
On this subject of conspiring to withhold power?
Whether or not it's a conspiracy, power was withheld, and the price of power
went through the roof because of that withholding. ...
If I was paranoid schizophrenic--well, maybe I am--I would believe there's a
conspiracy going on here.
But you may not have to actually conspire to have the same effect. If we only
have, say, five power plant owners in California, and I know that your plant is
out tomorrow because you scheduled maintenance, then if I bring one of my
plants down, I can create an artificial shortage. I don't have to talk to you
about it, because I can already see ahead that you've scheduled your power
plants out. ...
They don't have to meet in the back room, in a smoke-filled room.
Right. Not when they have sophisticated computer modeling and know what the
actions of each other are likely to be.
OK. So the rates have gone up and are going to go up?
That's right, in the short term. But I'm going to make sure that those rate
increases are subject to refund. And that means when we can prove that these
sellers have been gaining our market ... we're going after them, and we're
going to get some of the money back. ...
They say you're a political hack; that you're a Clinton/Feinstein operative;
that you did the governor's work and he rewarded you. But, they say, you're
not an economist; you're not a businessperson, and you don't know what's going
You don't have to have a Ph.D. in economics to know that these people are price
gouging. You don't have to have run an energy company to know that these
energy companies are taking every advantage of California. What they are doing
is clear. What we need to do is stop it and change the rules to make what
they're doing illegal.
... What I am is a lawyer who understands that, while it may be perfectly
legal, it is not in the public interest. I can analyze what they're doing and
all their legal briefs that they file at the Public Utilities Commission and
with the federal market costs and all over the state as well as the country,
and know that their arguments are just smokescreens. ...
The general rap is that the deregulation or restructuring of the California
electricity market has been a failure, but still people say there's a right way
to do it; that we just haven't done it in California. Do you buy that?
I grew up in Missouri and I say, show me. Show me the right way to do it.
Don't just theorize about it. Show me the path. If you can show me how it's
been done in other places successfully to protect consumers and not just the
market participants, and if you can show me that there's been additional supply
online that is environmentally friendly instead of a whole bunch of [Edison]
smokestacks, well, then I would be interested in seeing that model.
But so far, what I've seen is folks who start designing a yellow brick road to
an Oz that doesn't exist in the United States. So far what I've seen are folks
who have a financial interest in getting us to go down that yellow brick
road--pushing it enough to start down the path--but they can't show me that
what's at the end of that road is actually good for consumers or for
Do you mean Enron, for instance? They're unabashed in saying they want a
freer market and that's the problem.
Sure, they're going to want a freer market. They'd make more money that way.
They'd have less state oversight and they'd have less state control to stop
them or to call it what it is when they can gain the market.
They are, in a sense, a new creation of this free market world. They
operate huge trading [systems] that are unregulated.
Sure, absolutely. And I'd give them great deference to being the experts that
they are and taking tiny little ... opportunities and building it into billions
of dollars of profit. That's what I think we need to be taking a serious look
We need to be investigating Enron?
We need to be looking at every seller who can gain the market. Enron does not
produce power, but it sells power. ... It buys from you--the power plant
owner--and sells to me, another power seller, or maybe a utility. And in all
those millions of transactions, they make a profit. The problem here is that
unregulated wholesale market has created daisy chains of profit on profit on
profit. You sell to me, I sell to Joe, Joe sells to Sally. We all take our
cut. Who pays? The consumer at the end of the line, which is why having that
vertical integrated monopoly of the utility is looking better and
better--because then, you just look at the cost to produce the power, plus a
I'm not against profit, but I want it to be reasonable. And I, as a consumer,
am certainly willing to pay once for profit, but not all the daisy chains of
profit that exist in the California market today. ...
Someone said that the pain you're going through in California is similar to
the pain that any economy goes through when it goes from a state-run economy to
a free market economy--they'll be paying, but in the end, everyone will be
Yes? Well, there goes that economic doublespeak again. ... That pain is called
a "transaction cost," right? Or a "market imperfection," until we get to the
true free market of our dreams. The problem is real people hurt when they're
caught in those transaction costs. My aunt, the senior citizen who is on
Social Security, may lose her home if her gas bill triples or if her electric
bill quadruples. Or we may all have to pay a price in society for businesses
who operate on the margin--like a restaurant or a dry cleaner or California's
biotech energy industry. ...
You could say to somebody that's gloating in New England [that] ... this is
a national problem.
You've got to look at the facts, and the facts are Californians are super
energy efficient in the way we use electricity. In fact, California ranks 49th
in the per capita use of electricity across the nation. Only Rhode Islanders
are better at using electricity than Californians. So what I would say to
other folks in other states is, "Just wait until this problem comes to you.
Just wait until your state and federal market cops disappear from the beat and
the energy companies charge you whatever they want to. Then it's going to be
your problem, too." ...
The other problem, though, with folks in other states is that they're not using
energy as wisely as Californians are. So when those price spikes hit them,
their bills will be even higher than Californians' bills. ...
In reading about what happened in the 1930s, it seems like more or less the
same thing happened. The utilities hired lobbyists, and campaigned. It seems
like we've forgotten what our grandparents went through.
The parallels are astonishing, and we need to learn from them, absolutely. We
need to understand that, left to their own devices, power companies exist to
make profits, and if we let them on an unfettered basis, they will. That may
or may not be OK. It may be OK if luxury carmakers can charge whatever they
want. But for a fundamental economic necessity that really drives the engine
of our economy and that we all have to depend on, that's not OK. ...
You don't see the result being that this somehow will increase conservation,
will make people more efficient, if the price goes up?
I do think so, and I am a big advocate of tiering your electric bill so that
you have an incentive to conserve. Absolutely, and in fact, that's what the
Public Utilities Commission is doing. What we have is a baseline concept. We
take the average use of residents in a particular climate zone ... and say, "If
you can use 130 percent of baseline, your electric bill won't go up. If you
use, say, up to 200 percent of baseline, you'll be paying more for that
increment of power to incent you to use less. And if you use over 200 percent
of baseline--basically, if you're an energy hog--then that portion over 200
percent is going to be pretty expensive." ...
It's sort of like what we do with water right now.
Absolutely. Right. And as I said, Californians are already energy efficient,
and Governor Davis, in the legislature, has renewed California commitment to
energy efficiency in a very historic way. Californians have already agreed to
put a charge on their electric bill that totals $500 million a year for energy
efficiency incentives, so that we have programs to recycle old refrigerators
which are big energy hogs. ... If you agree to buy a new air conditioner, we'll
come pick up your old one and give you a rebate check to help you defray the
cost of your new one, because we know that older appliances are big energy
drains. So Californians all together have decided to invest in those programs.
[Governor Gray Davis] is such a quiet guy. Do you think he's trying to
distance himself from you?
No actually, I don't. No I don't. ... The PUC is building bridges to the
governor's office and we're building bridges to the legislature. It's an
independent constitutional agency. But I have great respect for the governor
trying to sort this out in a way that doesn't hurt consumers.
Or his political career.
This is a tricky issue, and in fact, there's not an easy solution. In fact,
there are no good solutions in the short run, because people are being
overcharged so much. So I don't think it's a bad idea, as a first threshold
matter, to want to understand all the facts before you go and completely
rearrange the industry, or the market, or the regulatory structure. I think
that it's wise, when you first see evidence of price problems in May and June
of last year, to take a few months to understand thoroughly the industry, and
the regulatory and statutory structure, before you come out with a grand plan.
In fact, he's said little, other than, "I'm not going to raise rates right
In a sense, he's been playing the middle in much the same way that Enron plays
the middle, which has led people to speculate that he's more interested in the
political fallout than he is in the solution to the problem.
I have a very clear job that is one piece of this, which is I'm a regulator and
a law enforcer, in the sense that we bring enforcement actions against
regulated entities who are not following the law. The governor has a broader
job to do, which is to keep the lights on, which means he, or one of his
agencies, is negotiating with the very people that we're investigating. That's
a tough balance, especially when those folks hold most of the cards. Several
times in California, we have seen that they can manipulate supply such that the
lights go off in California, and that's a difficult reality to face every
So I do think you need to take it slow, because certainly the prior
administration, without the facts about the past, put California on a dangerous
experiment that turned out to be a wild roller coaster ride that's really
harming the economy.
You don't think the experiment of deregulation is worth it?
A fundamental economic necessity--much like oxygen--is just not worth
experimenting with. It's not worth subjecting the California economy to such a
dangerous experiment, because if you get it wrong, you end up with what we have
So why should we, as responsible policymakers, just throw the economy on a path
that you don't know where it will end up? And you don't even listen to the
other side when they sounded warnings along the way--the consumer groups, the
unions, some of the environmentalists. Even some economists said, "This isn't
designed to work; it never will work; it never has worked." Why, in the face
of that kind of evidence, would they have moved forward five years ago?
Is that why they want you fired and impeached?
You know, it's probably a rational business decision for them to come after me,
because if they can silence me, that's one less person standing in their way to
even greater profits. ...
What's your reaction to [Treasury Secretary] Spencer Abraham's speech about
the nature of the energy crisis here in California and nationally?
... Abraham has alleged that California's problem is all about inadequate
supply of power. Factually, his premises can be disproven. Clearly, California
needs more power. That's absolutely true, because we import power from other
states. But the price charged for that power does not correlate to demand.
Supply and demand relationships are out of whack in California, and the Public
Utilities Commission has proven that time and time again. ...
You say the feds haven't been acting, but it looks like [in the] last month
or so, they've been asking for refunds. They seem to be on the ball.
California and all of its various agencies--as well as the California
utilities--are now starting to go to the federal government with just absolute
evidence of price gouging.
The $6.5 billion, for instance?
The $6.5 billion. Or the over-$500 million that the Independent System
Operator brought to their attention for January power purchases. And when
faced with overwhelming, incontrovertible evidence of gouging, the federal
government said, "Oh. We're not going to look at this system as a whole and say
that something's wrong with this system. We're going to pick the worst actor
and say to the worst actor, not 'You're wrong,' but 'Something appears to be
wrong here. Would you please give us more documentation about why we should
let you charge those outrageous prices?'"
But in doing so, in picking the worst actor on an individual basis, they have
let all the other market participants--all the other sellers of power at too
high a price--run free. They got home free with the feds picking on only one
player, or two, or three. It's just a small number of the most egregious
players they are asking for more documentation on. But in doing so, they have
approved the outrageous prices of most of the marketeers.
So it's both a fig leaf and a slick maneuver?
It's certainly a fig leaf, and it certainly leaves California customers holding
the bag. And we just want the feds to come to conclusion in that process so we
can take that evidence to court. The problem is, the federal regulators stand
between the state of California and a justice system. We can't go to court
first. We have to ... exhaust our administrative remedies through the federal
So as long as they sit on our evidence and sit on our complaint and let 90
percent of the folks off scot-free, while they only pick on a couple individual
players, we are precluded from getting real justice in the federal court.
Let me follow this by saying that the attorney general of California has not
rushed to your support and filed antitrust actions in California. Neither has
the attorney general of the United States. Neither has the head of the Federal
Trade Commission--Republican or Democrat. ... Are you a wild-eyed radical in
the middle of all of this? Or are they running for political cover, fearful of
I'm the state official who sees the numbers most clearly, because we [have] all
the data. And I'm the state official who has the responsibility to ensure just
and reasonable pricing. So 100 percent of my job is making sure that the
prices are reasonable. I spend a lot of time looking at the behavior that
causes the unreasonable prices.
The attorney general has a law on his plate, and in fact, the attorney general
has paired with the Public Utilities Commission. We are moving forward jointly
in investigating this market. But it is a complex market, and in order to go
after all the market players and not just the worst bad actors, it takes
careful weeks and months of evidence gathering and economic analysis to prove
the violations by law.
But you are out there on your own.
I don't believe so. I believe the consumer groups are with me. Many members
of the legislature see this as well. I believe the governor has come out
strongly saying [in his State of the State speech] that if price gouging
continues, California would take strong action and perhaps even take over a
plant if that can be proven.
So I think, instead of, as you say, being out there, rather I am on the leading
edge of where California has to go. Because the only other alternative is to
let the gougers run wild and run through the California economy. ...
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