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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