The current justification for the State of California to take over its three private investor-owned electric utilities is that public utilities do not have to pay a profit to its shareholders.
Another cost shift is that for the state to take over a private utility it would have to pay just compensation under the 5th Amendment to the US Constitution and the California Eminent Domain Law.
Due to the higher risk of bond default in California given the state is broke, the interest rate on a bond might be as high as, say, 8%, compared to the prevailing municipal bond rate of 4%. There will be the devil to pay for any eminent domain acquisition of private electric utilities from proceeds of a bond issue.
The last time California was in such a financial pickle was the so-called California Energy Crisis of 2001, which was blamed on deregulation and the greed of private energy arbitragers like Enron.
For an expanded description of what really happened during the 2001 California Energy Crisis see my article "Recent Science Hoaxes Re-Runs of the 2001 California Energy Crisis".
In effect, the power purchases needed to pump water from northern California over the Tehachapi Mountains to Southern California had the stranded asset costs tacked onto wholesale water rates.
Why am I retelling the story of what really happened with the California Energy Crisis of 2001? Because look for some new socially engineered and choreographed public spectacle or emergency to be created to pay the buyout price to acquire at least two of the three existing private electric utilities and shift the costs back onto taxpayers, water rate users, or some other tax base by invoking emergency powers.
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