Group Calls SB 888 Amendments Proof of Legislative Amnesia

Santa Monica, CA — California legislation that promised to “end deregulation, not mend it,” has been amended to allow big businesses to escape the regulatory system and buy power in the unregulated market just as they could during the failed deregulation experiment that led to the 2000-2001 California energy crisis. The Foundation for Taxpayer and Consumer Rights (FTCR) says that the plan to allow deregulation for big businesses will result in small businesses and residential ratepayers paying higher than necessary electricity rates and set the state on course for another devastating energy crisis in years to come.

“The politicians and lobbyists are telling the public not to worry, because they promise to get deregulation right this time,” said Douglas Heller, senior consumer advocate with FTCR. “Consumers were promised rate cuts and a more reliable energy system when these same politicians created the first deregulation scheme, but, instead, we got bailouts, blackouts and bankruptcies. It is astounding that lawmakers have already forgotten how devastating the energy crisis was. If they are not shaken out of this legislative amnesia, Californians will be forced to walk the deregulation plank once again.”

The amendments to SB 888 (Dunn) require the CPUC to develop a system for permitting “specified electrical corporation customers to purchase electricity directly from alternative retail providers.” In other words, the bill recreates an unregulated energy market, the manipulation of which was at the heart of the energy crisis. Under the original version of SB 888, all consumers would remain in the regulated utility environment — as had been the case in California before deregulation — which consumer groups contend would allow for much more energy system stability and for all consumers to share the benefits of any low-cost power that is available.

In addition to the bill giving big businesses special access to some of the state’s cheapest power at the expense of small businesses and residential businesses, consumer advocates say the amendments fall into the trap of placing too much faith in unregulated markets. The current proposal is based on the misguided belief that out-of-state power companies will not attempt to squeeze supplies and maximize profit in the future and that the Federal Energy Regulatory Commission would suddenly become a strong regulator, despite its much maligned history as a protector of private energy interests, according to FTCR.

“The companies that are lobbying to enter the unregulated power market today are the same ones that asked for deregulation in 1996 and then demanded that the public to save them from deregulation when it fell apart in 2001. And as soon as the next Enron starts playing games in the market and deregulation sends prices skyrocketing, these businesses will once again demand that the public shoulder the failure of their deregulation dreams,” said Heller. “Californians should not be put through this nightmare again.”

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