Powering the Dream_ The History and Promise of Green Technology - Alexis Madrigal [68]
That was Luz’s claim at least, one that was sadly borne out by history. But the state’s finance department didn’t see it that way. “We’re not convinced the plant won’t be built anyway,” a California Department of Finance aide testified before a state Senate committee. She also knocked Luz’s other argument: that the state would lose the payroll and sales tax revenue from the project if it wasn’t built. She said the investment money would just be spent somewhere else in the state. 67
Democrat Phil Isenberg, representing an area of Sacramento, hit the group the hardest, calling attention to the giveaway and terming it a “moderate-terrible” bill. 68 He echoed Phil Stark, who blasted Luz in a 1989 New York Times article about federal tax incentives. “To the argument that Luz produces clean, nonpolluting energy, Stark responds: ‘So do squirrels running a treadmill. It’s a question of how much you want to subsidize the squirrel-breeding industry,’” he said.69 Thus, solar electricity, as produced by Luz, was not seen as needed by the country. It was squirrel-breeding, not heavy industry. And yet it was heavy industry. During the construction of the final Luz plant, it was one of the largest building projects in the state.
Despite all the fuss, the two chambers of the California legislature passed the tax break with only eight dissenters between them.70 The bill went to Governor Pete Wilson’s desk. Goldman says that Wilson had told the company he would sign the bill.
Then came the big story on the passage, which ran under the headline, “Tax Break Quickly OK’d For Solar Energy Plant—Bill Assailed as ‘Giveaway’ Goes to Wilson.” The story recorded how Democrats split, fighting amongst themselves. Two days later the Sacramento Bee ran an editorial under the headline, “Luz Casts a Long Shadow.”71
The Bee pulled no punches:
Luz isn’t operating so close to the edge of financial extinction that it hasn’t been able to afford to spend tens of thousands of dollars on political contributions in recent years, hire some of the highest priced lobbyists and public relations consultants around the Capitol, and pay for a fancy party for the Energy Commission staff last year, not to mention the $1 million it’s paying San Bernardino to keep silent.
Sacramento Assemblyman Phil Isenberg calls SB 103 a moderate-terrible bill, not a major one. But at a time when the state is facing a $13 billion deficit, that’s bad enough to merit a veto.72
With that on his mind, Wilson decided he couldn’t sign the bill right away, despite what he’d told Luz.
“The exemption Luz wants isn’t going to help the solar industry as a whole,” the Bee editorial board charged. “According to the legislative committee analyses, Luz is the primary beneficiary.” But that’s because there was no utility-scale solar industry. Luz was the only company that had thrived during the Reagan years, and then they ended up penalized for their unique success. Wilson, new to the governor’s mansion, asked that the bill be withdrawn, altered, and resubmitted. It was, the legislature passed it again, and Wilson finally signed it. Only five weeks had passed, but by then, the company had lost the participation of new investors. They ran out of money two months later.73 The company entered Chapter 7 bankruptcy.74
After the company’s untimely demise, Newton Becker, the company’s board chairman, went before Congress to deliver a fiery oration about the irrationality of American energy policy. “As an investor I am here much like a crime victim trying to change a law,” he said. His testimony, which quickly summarized the whole lot of unfairness and regulatory silliness, demonstrated the tremendous carelessness of U.S. energy policy. He noted that the time to plan for