Consumer Groups Call Power Authority the Long Term Solution

The California State Senate passed SB 6X (Burton) today, which would create a public power agency for the state of California. Like the Los Angeles Department of Water and Power or the New York Power Authority, the state power authority would have the ability to build and own power plants, develop and implement efficiency and conservation programs and contract with private companies to ensure reliable and affordable power for California consumers.

“Public power will provide consumers with energy reliability, affordability and safety, which should be the pillars of our energy policy. After the fiasco of electricity deregulation, California’s best move is toward a public power system,” said Doug Heller, consumer advocate with the Foundation for Taxpayer and Consumer Rights (FTCR). “In thousands of cities, counties and regions throughout the country, publicly owned electricity has been the standard for generations, so we have plenty of successful models from which to learn.”

There are numerous city owned systems, such as the Sacramento Municipal Utility District, state owned (New York) and federal public power systems, such as the Tennessee Valley Authority. Approximately 250 public power systems in the United States are over 100 years old (Electricity Journal November 1997, p.31). What all the public run electricity systems have in common is that they serve consumers on a not-for-profit basis. Unlike Enron, Duke Energy or PG&E, a California power authority would not be accountable to shareholders only the taxpayers. Public power agencies do not pay dividends or charge rates that include a profit margin.

“Electricity deregulation subjected California to price gouging by the new energy cartel. In shifting away from the volatile unregulated marketplace and towards a rational, consumer oriented model, California can declare independence from the energy generators that have turned out our lights and plundered our treasury,” said Heller.

In November, 2000, FTCR released a series of principles for energy reform . In addition to re-regulation of utility-owned power plants and a windfall profits tax on private generators, a state-based public power system was identified as a crucial aspect of California’s post-deregulation energy policy.

FTCR proposed that:

• the state should institute integrated resource planning to determine California’s energy needs;
  

• the state should create a public power agency with the mandate to meet California’s energy demand in a reliable, affordable, efficient and environmentally sound manner;
  

• the agency should be authorized to build, own and operate, as well as purchase, power plants and transmission and distribution assets;
  

• the agency should be authorized to auction the right to build power plants to, or contract with, private generators that will sell energy on a cost-of-service basis to the utility distribution companies; and
  

• legislation should facilitate the authority of local and state government to exercise the power of eminent domain to take over generation, transmission and distribution assets if necessary.

SB 6X parallels this public power system proposal and, according to FTCR, will be an important tool in California’s effort to survive the current crisis and ensure a reliable and affordable energy future.

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