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Friday, Feb 23, 2024

Editorial—Death knell for energy deregulation

Finally, Gov. Gray Davis has taken off the kid gloves and is ready to do battle over the state’s deepening energy crisis. After six months of hand wringing and pleading for help from the paralytic Federal Energy Regulatory Commission (FERC), Davis has realized only Californians can be relied upon to pull ourselves out of the morass.

In his State of the State address last week, the governor took the first long step toward ending the crisis with his recognition that the state’s experiment with energy deregulation has been a “colossal and dangerous failure.”

By admitting, as he did, that deregulation “has resulted in skyrocketing prices, price-gouging and an unreliable supply of electricity,” Davis officially tore away the lie espoused so often by deregulation’s proponents , that if we just let the market run its course, everything would be all right. If we continue to listen to those proponents much longer, so many California companies and families would be forced into bankruptcy, there would hardly be any customers left to buy deregulation’s over-priced electricity.

We wholeheartedly agree with many of the governor’s recommendations for ending this energy debacle, particularly since so many of them were recommended in these editorial columns long before the rest of the media began realizing at all there was a long-term problem.

Among those were:

– Reorganizing the Independent System Operator. Created by the state’s three main utilities , including San Diego Gas & Electric Co. , and largely overseen by their executives, the ISO has done little toward its job of ensuring an adequate supply of power for the state. Not surprising, since so many of its board members are employees of the same corporations selling overpriced electricity into the California energy market.

– Reorganizing the California Power Exchange. CalPX’s ridiculous highest-bid-wins philosophy , which pays all energy suppliers the highest bid submitted instead of the lowest , is largely responsible for allowing and encouraging California’s excessive energy rates. CalPX provides the antithesis of a competitive market.

– The governor’s call for establishment of a new state agency to oversee development of new power sources, along with other suggestions to increase energy production in the state, would , as we’ve urged , take back local control of energy policy for the state. Under deregulation, that control was abdicated to FERC, an energy-industry controlled agency with little knowledge of California’s energy needs and, apparently, little interest in them.

– Renew support for energy conservation programs. With deregulation, the state’s once-vaunted energy conservation programs were whittled away, with the idea of increasing electricity consumption to make California a more attractive energy market.

– Perhaps the most controversial proposal: To criminalize the kind of behavior we’ve seen from the energy industry and fund the state attorney general’s office to investigate and prosecute price-fixing and manipulation, and racketeering by energy producers and wholesalers. As we’ve said here before, corporations don’t commit crimes; people commit crimes. Only by prosecuting those persons responsible for the crimes will corporate crime abate.

These proposals and others made by the governor in his speech make one thing clear: energy deregulation in California is dead. And as goes California, so likely goes the rest of the nation. Through its greed and avarice, the energy industry has shot itself in the foot , and the wound is fatal.


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