Consumer Activist Pushes Ballot Initiative To Undo California-Power Deregulation

Published on

The Wall Street Journal

LOS ANGELES — Harvey Rosenfield, a consumer activist who has made a career of tapping public anger at corporate interests, is drafting a ballot initiative aimed at reversing electricity deregulation in California.

While Mr. Rosenfield has a mixed record of success with voters, his inflammatory rhetoric in the past has focused public attention on such issues as rising auto-insurance rates and quality of care at health maintenance organizations and helped bring about change. Indeed, Mr. Rosenfield now expects to tap into widespread indignation over soaring electricity costs and impatience with regulators who can’t agree about what is to be done.

To get his initiative on the 2002 ballot, Mr. Rosenfield needs roughly 700,000 signatures on a petition, which he is expected to accomplish. Mr. Rosenfield also is expected to raise $7 million for his campaign; he has been able to raise money in the past through direct-mail solicitations.

Other consumer advocates said it is likely that Mr. Rosenfield will assemble a strong coalition to back his effort. “A backlash is coalescing around the failures of deregulation,” said Nettie Hoge, executive director of the activist-group Utility Reform Network.

The threat of an initiative could force public officials to take action. Mr. Rosenfield, in fact, says he hopes the threat of a “voter revolt” compels the California legislature to act. “If they can overcome their proclivity to do what the power industry wants, fine,” said Mr. Rosenfield. “If not, we’ll take action. We don’t think electricity should be a commodity subject to greed-driven profit gougers.”

Democrat Debra Bowen, who chairs the state senate utilities committee, said she hopes the ballot initiative forces federal and state officials to hammer out solutions. “Otherwise, we may end up with choices that wouldn’t be our first choices because the public will take matters into its own hands,” she said.

The preliminary-ballot measure, if approved by voters, would seek to impose a windfall-profits tax on power generators and suppliers. It is unclear whether California has legal authority to do that. It would create a state agency that could seize utility assets, such as transmission lines, through eminent domain, and order construction of publicly owned power plants. The measure also would prohibit the state’s three big investor-owned utilities from trying to recover $6 billion in power expenses from consumers. Southern California Edison and Pacific Gas & Electric Co. have asked for permission to bill retroactively their customers with a rate increase.

The latest fight will pit Mr. Rosenfield, through his nonprofit Foundation for Taxpayer and Consumer Rights in Santa Monica, Calif., and his allies against a host of interests. In addition to the utilities, which have billions of dollars at stake, opponents will probably include the new owners of power plants divested by the utilities, as well as those who would prefer to mend rather than end deregulation.

The effort may represent a rematch between opponents and supporters of deregulation. Two years ago, a coalition led by Mr. Rosenfield and supported by Ms. Hoge got a measure on the California ballot that sought to roll back electric rates by 20% and undo some provisions of the state’s 1996 deregulation law. To promote the measure, Mr. Rosenfield’s side raised $1.2 million, a pittance compared with the $40 million contributed by utilities to defeat the initiative. The measure, Proposition 9, lost by a 3-to-1 ratio. “In 1998, nobody was aware of the looming catastrophe,” said Mr. Rosenfield. “Now we know better.”

Mr. Rosenfield, an attorney, became a public figure in California in 1988 when he got a measure on the ballot that promised to roll back auto-insurance rates by 20%. At the time, consumers were upset by sharply rising premiums, just as they are now angry about soaring electricity costs. The insurance measure, Proposition 103, passed overwhelmingly. Insurers litigated for a decade. Eventually, billions of dollars in premium refunds to consumers were ordered by the courts.

— Rhonda L. Rundle contributed to this article

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

Latest Videos

Latest Releases

In The News

Latest Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Releases