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Will California Turn Out the Lights
on Utility Deregulation?

October 28, 2005

The state that became the poster child for the ill effects of utility deregulation might reject the concept once and for all at a special election on Nov. 8.   As one of eight ballot issues, however, the deregulation repeal message could be drowned in the uproar of a slew of dueling interests battling across television, radio, newspapers and telephone calls.  

Proposition 80 would place new controls on the state's energy market, requiring electric service providers to be regulated by the California Public Utilities Commission. The measure is supported by consumer advocates who believe the deregulation of California's utilities helped cause the state's power crisis in 2001.   It is opposed by power companies who have invested heavily in the deregulated system.

IBEW utility locals across the state are united in support of this deregulation-repeal measure, but union efforts this election are concentrated mostly on defeating the “paycheck deception” proposition that would require public employee unions to receive annual permission from members to use union dues for political purposes.   (Click here to read a story about unified labor efforts to defeat Proposition 75.)

Californians were promised that electric deregulation would bring cheaper power.  But in 2000-2001, unregulated energy service providers like Enron manipulated the electric system to create artificial shortages and drive up prices.  The state suffered blackouts and lost a staggering $40 billion, while IBEW utility employees endured a dozen years of turmoil, including downsizings, dislocations and the bankruptcy of Pacific Gas and Electric.

“Californians may think the electric crisis is over, but it is not,” said Local 1245 Business Manager Perry Zimmerman.  “The energy service providers who extorted California are waiting for another bite at the apple.  And they will get their chance if we do not act to stop them.”

Electricity prices have stabilized since 2001 because the federal government ordered generators to stop withholding power and the state stepped in and negotiated long-term contracts for electricity. But deregulation remains the law in California.  When those state-negotiated contracts expire, the energy service providers will have fresh opportunities to throw California’s electric system into chaos.

Proposition 80 is a straightforward solution to the problem.  It requires every retail provider of electricity in California to have sufficient resources and reserves to serve their customers.  

Much of the language in Proposition 80 was adopted from a similar bill that passed the California assembly last year.   Vetoed by Gov. Arnold Schwarzenegger in 2004, the bill was rewritten by the consumer group Utility Reform Network, which also added language encouraging the use of renewable energy.


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