The "gamble", as you put it, was changed significantly when deregulation moved the goal-posts. It was dependent on the utilities retaining control of generator costs. The de-regulators were supposed to cover that scenario. They didn't. If an indivudual tried this, with another individual, they call it extortion and the individual in queston would be rotting in jail. The salient fact is that the generators are threatening to bankrupt PG&E unless the state pays the extortion amount, by midnight. Does anyone have a clue what would happen if the state doesn't pay? Would the state have to step in and start operating PG&E? IMHO, if this isn't corrected, todays rolling blackouts will be trivial, compared to a total PG&E collapse of services.

-----Original Message----- From: matthew@tycho.net [mailto:matthew@tycho.net] Sent: Thursday, January 18, 2001 3:00 AM To: Roeland Meyer; 'Sean Donelan'; nanog@merit.edu Cc: matthew@admin.tycho.net Subject: RE: Second day of rolling blackouts starts

You're skipping the part where...

...

PG&E is prevented from passing on their cost by law. Generator charges currently exceed allowed end-user rates by two orders of magnitude.

is because PG&E made a deal with the legislature and the CPUC in which they accepted frozen consumer rates in trade for other concessions that resulted in large profits and other transition charges which have been passed on to, and are still in the pockets of, the parent holding company.

at the time, the frozen rates were *above* their cost, and they were betting on a future cost structure that would result in huge profits for them and their parent.

this, in my opinion, is no different from *any other* gamble one makes in business management. sometimes big bets pay off... and other times, you're so wrong that you're forced into bankruptcy.

perhaps the state should step in and bail out Northpoint, who bet on the Verizon deal going through. or any number of other dot com businesses that gambled and lost.

-matthew kaufman Tycho Networks/DSL.net matthew@tycho.net