[BETA] Fortnightly

ON TUESDAY, NOVEMBER 3, THREE WEEKS AFTER I wrote this column, California voters narrowly defeated Proposition 9. In case you missed it, that was the ballot initiative that would have cut off funding for nuclear power in California through securitization or any other fancy financing for stranded costs. A "yes" vote would have told utilities, in effect, to "take these bonds and shove it."

But the voters said "no," however, and I'll tell you why - even before the first ballot was cast.

In the end, Prop 9 failed for the same reason that George McGovern lost to Richard Nixon in 1972. The moment had come and gone. As McGovern discovered, the anti-war passions of 1968 could not be rekindled four years later to spark a crusade and a run for President. The war, in fact, was already over. We just didn't know it yet. Today, as then, crusades have fallen out of fashion. Are utilities getting a free ride? Maybe, but who believes that's more important than risking chaos in bond markets?

ON OCT. 13 I INTERVIEWED HARRY SNYDER, of Consumers Union, the nonprofit publisher of Consumer Reports magazine and a prime mover behind Proposition 9. Snyder, the senior advocate for the West Coast office of Consumers Union, sounded a bit like I imagine I did back in 1972. As we talked, it occurred to me that he might be living in the past. He hasn't yet figured out that the anti-nuclear and anti-business fervor of the late 70's and early 80's has faded too far too fast for voters to risk putting state or local governments into default, just because they might feel miffed at not being consulted when California legislators bowed to industry pressure and allowed recovery of stranded costs in Assembly Bill 1890, the state's primary electric restructuring statute.

I asked Snyder to name any other group besides Consumers Union that was supporting Proposition 9.

"How about the League of Women Voters?" he asked. "How about the Sierra Club? All the groups that cannot be bought with utility money are supporting Prop 9. It's a wonderful volunteer effort that's going on, door-to-door. This is an assault on democracy."

Snyder was waxing sarcastic about the "democratic" process that saw the utilities and big industrial customers get what they wanted from the state legislature through AB 1890. Snyder emphasizes also that while the 10-percent rate cut that state legislators guaranteed for California Consumers will last only four years, until the market opens for real (without subsidies) in 2002, but that the payments to the trust for securitization - the so-called "Trust Transfer Amount" - will continue for 10 years. That's why Consumers Union says that AB 1890 is a bad deal for utility customers.

Nevertheless, I wanted to learn more about the fate of the bonds. I asked Snyder about the study by MetWest, otherwise known as Metropolitan West Financial and Strategic Services. Cited widely by Prop 9 opponents, such as the AB 1890 Coalition, and CARES (Californians for Affordable and Reliable Electric Service), the MetWest study quantifies the real-life