FTCR Cautions Congress Not To Repeat California’s Deregulation Mistake
Santa Monica, CA. — Legislation introduced today aims to reverse California’s disastrous experiment with energy deregulation and received strong praise from consumer advocates with the Foundation for Taxpayer and Consumer Rights (FTCR). At the same time, FTCR cautioned Congress, expected to debate a Bush Administration proposal this week which would allow for national expansion of deregulation, not to repeat California’s deregulation mistake.
“Californians were the lab rats for a deregulation experiment that went horribly wrong,” said FTCR’s senior consumer advocate, Doug Heller. “Californians want a regulated energy system that can be counted on to provide reliable and affordable electricity, rather than the deregulation scheme that gave us blackouts, price gouging and supply manipulation.”
The California bill (SB 888), introduced by a dozen state legislators, acknowledges the failure of the 1996 deregulation law, AB 1890, and would repeal that legislation to “re-regulate” the California energy marketplace. At the height of the deregulation debacle, power companies were charging prices 10,000% higher than the normal prices of the regulated system.
Despite the about-face proposed by California lawmakers, who experienced deregulation firsthand, federal lawmakers are currently considering proposals to federalize the deregulation disaster. The Bush Administration’s energy policy, outlined in the 2001 National Energy Plan and developed by Vice President Cheney after secret meetings with energy industry executives, seeks to expand “market-based rates” for electricity through an increased dependence on wholesale energy markets and the energy trading business. This is the same scheme that allowed power companies like Enron to overcharge Californians by billions of dollars.
“The most important lesson of California’s disastrous deregulation experiment is that electricity is too vital to our economy and public safety to leave in an unregulated marketplace,” said Heller. “While California legislators move to return reliable, affordable electricity to consumers, Congress should not force the proven failure of deregulation onto the nation. Ratepayers across the nation will face California-style gouging if energy companies — as Bush’s plan recommends — are allowed to charge whatever they can get for power.”
In January 2002, FTCR issued a report entitled: “HOAX: How Deregulation Let the Power Industry Steal $71 Billion From California,” which shows that the power industry manufactured blackouts and threatened more of them as tools to gain unprecedented profits and overpriced, long-term contracts during the California energy crisis of 2000 and 2001. The report also warns that unless the state of California regains control of its electricity supply, and makes it publicly accountable, additional artificially-created crises will occur.