Citizens for Limited Taxation & Government
"The Commonwealth Activist Network"
18 Tremont Street #608 * Boston, MA 02108
Phone: (617) 248-0022 * E-Mail: cltg@cltg.org
Visit our web-page at: http://cltg.org
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*** CLT&G Update ***
Wednesday, October 1, 1997

Harshbarger Backs Biggest Bailout Boondoggle Since the S & L Scandal

The Boston Globe
Wednesday, October 1, 1997
Business Section
Power and politics make these strange bedfellows
By Scot Lehigh
Globe Staff

It’s not quite as unlikely as Jesse Helms joining forces with Ted Kennedy, but on a local level, it’s almost as startling.

Beginning today, Massachusetts radio listeners will hear Jim Braude, long one of the state’s most insistent progressives, making common cause with Barbara Anderson, for decades one of its most outspoken conservatives.

"We’re usually on opposite sides," Braude notes in the radio advertisement, which will run on major Massachusetts drive-time stations.

That is something of a classic understatement. After all, from 1987 to 1994, Braude, then the executive director of the Tax Equity Alliance for Massachusetts, and Anderson, the director of Citizens for Limited Taxation and Government, traveled the length of the state disputing one another in hundreds of forums on issues of taxes, spending, and the role of government itself.

It was starkly different world views the two presented, but a listener could count on one constant: If Braude favored it, Anderson opposed it. And vice versa.

"But we’ve finally found something we agree on," adds Anderson. This time, the topic is once again power, but not of the political sort.

Electricity is the issue, and the two are taking dead aim at the agreement Attorney General Scott Harshbarger, a Democratic candidate for governor, has negotiated with Massachusetts utilities. It’s far too easy on the utilities, they say, and far too tough on consumers.

The fact that Braude, with his southpaw perspective, and Anderson, with her starboard tilt, have arrived at the same conclusion is why electric power populist John O’Connor, the wallet behind the radio advertisements, recruited the ideologically disparate duo.

"They represent the left and the right in this state," said O’Connor, an energy specialist who is president of Greenworks Inc., a Cambridge firm which specializes in incubating new businesses. "I can’t even get them to agree on the time of day, and here is an issue they have agreed on."

O’Connor hopes that having Braude and Anderson working together to wave a warning flag will help focus consumers’ attention on the abstruse proposals that would dicate how deregulation of utilities and power providers proceeds.

"This is literally the biggest consumer ripoff ever designed," charges O’Connor, who also ran a large ad yesterday in The Boston Globe as part of his campaign against Harshbarger’s plan.

Both Braude and Anderson say the tentative agreement the attorney general has negotiated with the electric utilities offers far too generous terms, particularly on how to handle so-called stranded costs. A stranded cost is an investment that a company can’t sell or expenditures it can’t completely recoup in the new era of electricity deregulation - for example, a generating plant that must be shut down, or an asset that must be sold at a loss.

By most estimates, such costs could run as high as $12.5 billion here alone.

Harshbarger’s agreement makes the utilities try to liquidate those assets and use the money to lower rates, but lets them recover the losses by billing ratepayers for the entire amount.

"The fact of the matter is that consumers in Massachusetts have been paying stranded costs for decades as part of their bills," said Ed Cafasso, Harshbarger’s spokesman. "Our agreements force utilities to decrease their stranded costs and all of the savings are passed along to the consumer."

The fact that the agreements guarantee an initial minimum rate reduction of 10 percent is proof that it’s a good deal for ratepayers, said Cafasso.

Not so, says Braude.

The rate rollback "would be far larger if they didn’t give away the store on stranded costs," claims Braude.

So what would he do differently? Braude says it is reasonable to let utilities bill ratepayers for bad investments made under the direct order of state or federal laws or regulatory agencies.

But if the poor investment was made by utilities in the ordinary course of business, shareholders, and not the ratepayers, "should have to eat it," Braude says.

Anderson agrees, saying that sticking ratepayers with the tab for bad business decisions is antithetical to the very idea of free enterprise.

"Over the years, we have found that some elements of the business community wouldn’t know free enterprise if they found it in their salad," she said. "The free enterprise system means taking risks, and if you fail, not expecting taxpayers and ratepayers to bail you out."

Cafasso says Braude and Anderson are trying to "hoodwink" Massachusetts voters with populist simplicities, and that the Braude-Anderson approach would mean a lengthy court battle, millions in court fees, and possibly no savings to consumers for years.

But with the state House of Representatives set to unveil its own deregulation proposal - one said to be less generous to the utilities - on Friday, Braude insists that it’s time for a full-fledged public debate on an issue that thus far has received far too little attention.

"Never have so many known so little about a ripoff so big," he said.
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