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Under the new plan, large users would be allowed to leave the current utility supply system and buy their power from private generators and suppliers. This would leave small business and residential rate payers with the tab for paying off the debts of the utilities, who under the new Schwarzenegger plan could pass along their full price increases to their ratepayers instead of being responsible for their bad decisions themselves. In other words, it’s a plan that Ken Lay would love, and one that he probably sold Arnie on when they met back in early 2001.
Schwarzenegger is also going to push a typically Republican idea for dealing with the state’s current structural gap between revenues and expenses. Instead of having the courage to raise taxes, Arnie like Bush will just say "Charge it, please." The state GOP adamantly opposes any tax increases and in fact will be attempting to roll back existing taxes. The GOP doesn’t want to specify what cuts they propose to make up for the gap between revenue and expenses, so Arnie has decided to borrow his way out of the entire $20 billion current and budget-year gap with one huge bond measure.
You read that correctly: Arnie will be proposing a $20 billion bond measure and then bash the Democrats on top of that to still cut spending to bring the insufficient revenues in line with spending. The GOP base will love that all of this happens without them paying any more, and in fact they will probably get tax cuts. And future bond measures for schools and parks will be adversely affected by this monster indebtedness.
Residential demand for electricity is, in the short run at least, highly inelastic, and competition in the retail market a fantasy which will never be truly realized. A field ripe for looting. They already did it once.
Coincidentally, the borrow now - pay later approach is the centerpiece of the Katz mayoral campaign here in Philadelphia. The idea is they'll borrow a bunch of money now, cut taxes, and the resulting growth in city residents and businesses will allow the gov't to easily pay off the loan through higher future revenues.
Coincidentally, the borrow now - pay later approach is the centerpiece of the Bush economic plan.