Deregulation Date Set
State officials announced last week that the start-up date for deregulation of California’s electricity market has been moved back to March 31, three months after the originally slated deadline of Jan. 1.
The delay was prompted by computer problems at the Independent System Operator, the agency created to run the state’s power grid, and the Alhambra-based Power Exchange, the agency intended to act as a commodities exchange for buyers and sellers of electricity.
Officials estimate the delay will cost $45 million the employee salaries and operations costs of the two agencies during the three-month period. The costs would have been paid through fees and commissions collected from power marketers, if deregulation had commenced Jan. 1. Ratepayers will have to foot the bill.
The costs to big businesses around the state are unknown. Many large companies had negotiated lower electricity rates with power marketers that will start with the commencement of deregulation. Also affected will be the power marketers themselves, who had expected to finally begin collecting revenues starting last week.
Nonetheless, residential and business customers of Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric the state’s only investor-owned utilities still began receiving a state-mandated 10 percent cut in their utility bills starting with the new year.
Homicide Rate Drops
While violent crime is dropping nationwide, it’s dropping even more quickly in Los Angeles, which is on track to post the lowest homicide rate in 20 years in 1997 even though the city’s population has grown by more than 700,000 during that 20-year span.
There were 566 homicides in L.A. as of Dec. 14, compared to 709 for all of 1996. The last year Los Angeles had less than 600 homicides was 1977.
In 1996, homicides were down 11 percent nationwide and 16.5 percent in Los Angeles.
Criminologists cite a variety of possible causes for the decline, even while admitting that exact explanations are unknown. Contributing factors include tougher sentencing laws (particularly California’s Three Strikes law), a decrease in the number of young males with the aging of the baby boom population, a stronger economy, increased police presence and improvement in police tactics, and stabilization of the drug trade.
Other serious crimes, such as rapes, robberies and assaults, are also on the decline. Police estimate that final statistics will show a drop of 10 percent in these crimes from 1996 levels.
Home Sales, Prices Keep Rising
The recovery of L.A. County’s housing market continued in November, when sales increased 6.3 percent over November 1996 and the median sale price jumped to $178,090, up 5.7 percent from the previous year.
Homes were selling at a blistering pace throughout the state in 1997, according to a report from the California Association of Realtors. Statewide, sales were up 14.1 percent in November from the year-ago period and the median price rose to $193,750 up from $175,500 in November 1996.
Although it was a strong month, November saw a 7.3 percent decline from the pace set in October. However, the monthly total in October was the highest since February 1989.
Business Tax Scofflaws
An audit released last week showed that many tenants of the Los Angeles Harbor and Airport departments may not be paying their business taxes, an oversight that could be costing the city hundreds of thousands of dollars a year.
City Controller Rick Tuttle ordered a review of 100 of the 907 companies doing business with the two departments mainly, they are tenants that rent space at the airport or harbor. Sixty-nine of the companies had no business tax certificate, and there were no indications they had paid their business taxes.
If the sample is a representative one, approximately 625 firms might be avoiding the tax, costing the city well over $600,000 a year (the average firm pays about $1,000 annually in business taxes).
The audit was undertaken to determine whether the Airport and Harbor departments were requiring firms doing business with them to take out business tax registration certificates. Officials with the departments pledged to study the audit and make any changes required by the city.
Tuttle has asked the City Clerk’s Office to develop a plan to deal with the problem by the end of January.
Iwerks Lowers Showscan Offer
Motion-simulator ride builder Iwerks Entertainment Inc. last week downgraded its buyout offer for rival Showscan Entertainment Inc.
Under the amended agreement between Iwerks and Showscan, Iwerks will convert each share of Showscan common stock to 0.62 of a share of Iwerks stock. The earlier agreement called for a ratio of 0.85. Based on the closing price of Iwerks shares on Dec. 29 of $2.25, that would value Showscan at about $16 million.
Shareholders of Iwerks and Showscan are slated to vote on the acquisition agreement in late February.
Fed Board Members Appointed
Lonnie Kane, president of women’s apparel manufacturer Karen Kane Inc., and former Rebuild L.A. chief Linda Griego were appointed to the seven-member board of the Los Angeles branch of the Federal Reserve last week.
The two appointees will help oversee a Fed branch whose zone contains over 25 million people. The L.A. branch is an adjunct of the San Francisco office that serves the southern third of California, all of Arizona and portions of Nevada.
Kane was appointed to his seat by the Fed’s Board of Governors. The entrepreneur started his company with wife Karen in 1979 and helped build it into a business with $90 million in revenues annually.
Griego is the managing partner of downtown L.A. restaurant Engine Co. No. 28. She was deputy mayor of economic development under former Mayor Tom Bradley and was later put in charge of Rebuild L.A., a group formed in the wake of the 1992 riots to help revitalize the inner city. She was appointed to the board seat by the board of the San Francisco branch of the Fed.
Compiled by Dan Turner
