Consumer Group to Lawmakers: Do Not Try Energy Deregulation Again

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Utility-Sponsored Deregulation Plan, Authored by Speaker Nuñez, Heard in Assembly Committee Today

Sacramento, CA — Consumer advocates testified today in opposition to an energy deregulation proposal by Assembly Speaker Fabian Nuñez and sponsored by Southern California Edison. The legislation would put California back on the path to the unwarranted price spikes and unreliable electricity service brought on by the energy industry’s last deregulation scheme, said the advocates.

AB 2006 (Nuñez) would re-introduce a central aspect of deregulation, “direct access,” and give the largest companies in California exclusive access to some of the state’s most efficient, inexpensive power. It was heard in the Assembly Utilities and Commerce Committee this afternoon.

“Under this proposal, the biggest businesses in the state will have access to the cheapest power while average consumers pay higher rates. With predictions of electricity shortages, AB 2006 sets the stage for the next energy crisis where residential and small business ratepayers will again be forced to subsidize the big companies that re-enter the utility system in desperation,” said Doug Heller, executive director of the Foundation for Taxpayer and Consumer Rights (FTCR). “Whether or not there are shortages, consumers are sure to pay higher rates under this bill.”

Heller noted that a series of agencies and state officials have taken actions or presented analyses in recent months that help explain why any attempt to re-deregulate the state’s energy system would be infeasible, costly and dangerous for the public:

  • A federal grand jury has indicted Reliant Energy Resources for manipulating the deregulated California energy market as part of an effective effort to manufacture phony electricity shortages in order to increase electricity prices. The charges date to June of 2000, before there was any “energy crisis” in California, indicating that manipulation of this unregulated environment did more than foster the crisis: deregulation actually created the worst economic and public policy crisis in California history.
  • The California Attorney General released a white paper which emphasizes that without tremendous changes to federal law, including the Federal Power Act, the Natural Gas Act and the structure of the Federal Energy Regulatory Commission, as well as state law, a deregulated California energy market will put the state’s consumers, businesses and taxpayers at dire future risk of repeating the energy crisis with no hope of relief or remedy.
  • The Division of Strategic Planning of the California Public Utilities Commission identified a series of pitfalls that make the prospect of implementing an equitable core/non-core energy scheme unlikely, and warned against the cost to utility consumers if the state takes any step towards deregulation.

“California’s unregulated electricity marketplace was rife with manipulations, gaming and profiteering at the expense of the consumers, businesses and taxpayers of California. The most important lesson from the disastrous deregulation experiment is that electricity is too vital to our economy and public safety to leave in an unregulated marketplace. AB 2006 does not heed that lesson and instead would recommit California to a misguided faith in electricity markets,” said Heller.

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.

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