Consumer Group Calls on Speaker Nuñez to Drop Deregulation Plan From Energy Legislation
Santa Monica, CA -- One of the proponents of California's first deregulation experiment, Edison CEO John Bryson, told Reuters that any attempt to deregulate electricity once again in California "would be like playing Russian roulette with the state's electricity system." Consumer advocates, who have been urging California Assembly Speaker Fabian Nuñez to drop the energy deregulation provision in his energy legislation (AB 2006), pointed to the Bryson statement as more evidence that the legislature should re-regulate the energy system, rather than again place it in the hands of unregulated power companies at great expense to consumers.
In a letter to Nuñez, the Foundation for Taxpayer and Consumer Rights wrote:
"At the core of your bill is a deregulation proposal that would make Californians lab rats once again in a dangerous deregulation experiment allowing big businesses to leave the system for cheaper power while concentrating higher rates on residential and small business consumers." The letter is copied below.
AB 2006, the consumer group noted, is sponsored by Southern California Edison, the utility subsidiary of Bryson's Edison. Although Bryson's statement clearly rebukes deregulation, the Nuñez-Edison bill contains rules that would deregulate about a third of the state's energy system and impacting all consumers. It would allow big business customers to purchase some of the cheapest electricity in the state, while concentrating the more expensive power onto the bills of residential and small business consumers. Consumer advocates have further warned that allowing businesses to buy power in a deregulated market, known as "direct access," will result in a shifting of pre-existing energy crisis costs to small customers.
FTCR notes that, given another deregulation opportunity, the private power firms will once again gouge California businesses. When unregulated power prices surge and the next crisis hits, the small consumers will bear the burden of a huge influx of big business customers that will threaten to leave the state if they cannot get low utility rates, the group predicted.
"When the same warning comes from the state's consumer advocates and utility executives, you can be sure you are playing a dangerous game. You should amend AB 2006 and take the deregulation bullet out of the chamber," FTCR wrote.
AB 2006 is set for a vote on the Assembly floor next week.
May 21, 2004
Honorable Fabian Nuñez
Speaker, California State Assembly
State Capitol, Room 219
Sacramento, CA 95814
Re: "Russian roulette with state's electricity system"
Dear Speaker Nuñez:
While it might sound like the warnings of a consumer advocate, today's statement that any further experimentation with energy deregulation "would be like playing Russian roulette with the state's electricity system," actually came from Edison CEO John Bryson.
The same John Bryson who supported the state's first foray into deregulation, proclaiming it "the best, soundest way to move to a desirable competitive market that will benefit all customers, large and small..."
And the same John Bryson who has worked so closely with you in your push for AB 2006, which you call the "Reliable Electric Service Act of 2004." But at the core of your bill is a deregulation proposal that would make Californians lab rats once again in a dangerous deregulation experiment allowing big businesses to leave the system for cheaper power while concentrating higher rates on residential and small business consumers.
In the past, consumer advocates have urged you to remove the deregulation provisions from your bill. Now the sponsor of your bill argues against those provisions. We hope that you will heed these warnings and not risk another energy crisis by foisting this deregulation scheme on California ratepayers. By removing the deregulation section of your bill, your goal of achieving reliability and affordability can be achieved (though the bill would still need modifications). If the deregulation components remain in the bill, your goals are left in the hands of the private power companies that intentionally manipulated California's energy market to steal billions from our state and the Federal Energy Regulatory Commission, which utterly failed to protect California from abuse during the crisis and has repeatedly failed to return the stolen treasure to our taxpayers and ratepayers. In other words, California's energy system will be left entirely unprotected.
When the same warning comes from the state's consumer advocates and utility executives, you can be sure you are playing a dangerous game. You should amend AB 2006 and take the deregulation bullet out of the chamber.
I would be pleased to discuss this further with you at your convenience.
 "California CEO Says Moves to Deregulate Are Risky," from Reuters, Los Angeles Times May 21 2004
 Los Angeles Times December 21, 1995