De-regulation plans from 1996 have been an outright failure. It may have had good intent on paper but was not rolled out with the necessary business environment in California to be successful. De-regulation was basically born out of the greed of large business in California and the needy politicians also of California. I say "needy politicians" because they need the money the big business had to offer. Politicians won't do what's right for the people they represent but will do whatever necessary to better their own interest in getting elected or re-elected. Politicians today are only interested in keeping their jobs with all the power and perks it has to offer. We all know what some "perks" one Modesto congressman was used to receiving......so here it is the way I view it.
Large California business's lobbied aggressively to somehow receive lower utility rates. A large percentage of the large businesses happen to be high tech companies up in Silicon Valley. Ironically, the same companies actually fought the hardest to prevent the construction of generation plants in the area!!! On top of all that, these same type of companies have much higher usage of electricity than most other industries.
California politicians bowed to the Large $$$ Business's $$$ to develop a plan to lower rates. The proposal ended up being an assembly bill (AB1180) to de-regulate the utilities by creating a competitive environment.
This competitive environment was to be at the generation end rather than the delivery end. It was decided that the utilities needed to sell more than 50% of the utility owned generation as to not have an "unfair advantage" in the market. The idea was that with different owners operating the generation plants, this would allow competition between each owner, thereby lowering the costs. However, with an already limited supply, a rapidly growing electrical demand and the ability for the new generation companies to manipulate electrical output, prices hit the roof!! Why in the world would anyone think that large corporations with this supply and demand scenario and with such a necessary product as electricity think they wouldn't "gouge"?
The early part of the year 2000, SCE, PG&E and SG&E began to witness what could become a big problem with prices beginning to escalate. The utilities approached the California Public Utilitiy Commission CPUC several times to be allowed to enter into long term contracts with the generation companies in order to negotiate reasonable rates. The CPUC slapped the utilities hands and said NO WAY! They believed the utilities were just trying to lock in higher rates. (In reality these contracts at that time would be much lower than the rates today!) Only when things were totally out of control did the CPUC finally give permission for the utilities to enter into long term contracts!.....too little too late. Lock in the rates at the prices during the peak?...right......
So now you ask why didn't Governor Davis act on this any earlier?
P O L I T I C S ! ! Remember? Bush against Gore.......Davis was going to deliver California to the Democrats and not do anything to cloud the Democrat Party just prior to the election in November. Davis believed that if Gore won, Gore and the Federal Energy Regulatory Commission (FERC) would have come to his rescue and all would have been OK. Davis took his chances, rolled the dice and up came up "craps" !
People ask why should the taxpayers "bailout" the utilities? Why not? It's not a "bailout".....it's only fixing what the politicians broke! The other choice is to have the utilities go under and then we can turn out the lights and all of our wonderful jobs will go south....or north...or east....anywhere but in California. Or, we can let the government run the utilities? Letting the government run the utilities would have the same result economically to the taxpayers because someone will still have to pay for the power and the already incurred debts. Only now we will have a less efficient entity running the utilities at a higher cost. Oh.....you say the DWP has lower rates?......only because DWP benefits from subsidies from the local taxpayers........yes, we all pay one way or another.
The politicians know it is in their best interest to repair what is broke before businesses leave this wonderful state along with all of our jobs. So.......it'll get fixed.....we'll have many more bumps along the road to recovery and in the end.......California made a very few (mostly out of state generation companies) very very rich. That's all we did in the long run.
Another piece of misinformation is that "the utilities wanted deregulation"....NO WAY!!......the utilities fought tooth and nail for years but only when they realized they were looked upon as giant monoplies trying to hold onto their kingdom......well who wouldn't want to hang on to a monopoly?....weren't gonna get rich but as long as they delivered the power, they were going to receive a moderate return on profits. At some point, the utilities had to go along with the program and help write the rules in the best way possible.
Another problem with folks in California are all the "NIMBY'S"! (not in my backyard) people. We all just love all the very cool high paying jobs here in California! My goodness........so many more jobs here for all of us to enjoy........heck, the population keeps growing, we all are enjoying how our new homes keep going up in value in our upper middle and upper class neighborhood, we really love our SUV's to haul around our family in comfort, we all love our air conditioning in our homes...........but here we all are....preaching how we have to be more concerned about our environment!!!!! GIVE ME A BREAK!! YOU CAN'T HAVE IT BOTH WAYS!!! I'm not saying that we all need to sell our SUV's and move into a shack. We have an SUV, we have our motorhome, we have our boat, we have great jobs here in California........we're just not hypocrites about it. We do have to do our best to protect our environment, but we need balance and we can't just go out blindly and protest every generation plant or transmission line proposed. The bottom line is that we must have the infrastructure to support our growing economy and population......no infrastructure?....no jobs!
Things could have been a lot better if it weren't for the INACTION of Governor Davis and his silly CPUC appointed president, Lorretta Lynch and also our federal commission, FERC.
Get involved with our state government and write an email to your representative if you have a gripe or a solution. Click here for a list of our House of Representatives. I think by now I'm "filtered" on many of the congressmen, Gov. Davis, the CPUC and FERC's email addresses.
In my humble opinion, electricity being a necessary product to our health and economic foundation, it is a product that should NEVER be de-regulated!
Oh.........and further more........how about them phone companies and communication companies that are the result of de-regulation?........working real well eh?
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