Consumer Groups Push to Re-Regulate Electricity
Several consumer groups last week took steps toward pushing for
re-regulation nationally and in states, denouncing efforts to
deregulate the electricity industry as flawed.
A new report, "Reconsidering Electricity Restructuring," was
released Thursday in Washington, D.C., by the Consumer Federation
of America (CFA) and Consumers Union (CU), pointing to three years
of power price spikes and brownouts in various regional and state
wholesale markets as an indication that supply and demand
conditions are not right in the power business.
California's current struggles are cited by CFA and CU as having
a dampening effect on efforts elsewhere in the nation to open up
In a separate take-it-or-leave-it gesture earlier last week,
California consumer advocates on Nov. 28 handed the state's
governor and state legislature an ultimatum to rollback electric
industry restructuring and insert the state in an expanded role
over the development and operation of power plants. If the elected
officials fail to act, the consumer activists plan to put another
measure on the statewide ballot in 2002.
The sponsors of a failed 1998 anti-electricity deregulation
ballot measure, Harvey Rosenfield and Douglas Heller, of the
Foundation for Taxpayer and Consumer Rights in Santa Monica, CA,
offered a six-point "reform" proposal that is aimed squarely at
what the consumer activists allege are abuses by the state's
investor-owned utilities, merchant power plant operators and state
Southern California Edison Co., one of the major architects of
the state's 1996 electricity industry restructuring law, quickly
reacted with a prepared statement calling the proposal "misguided"
and one that "would hurt consumers and threaten the foundation of
California's economic recovery."
"As California policymakers learned to their dismay, the
interstate market is critical to electricity competition," said
Mark Cooper, CFA's research director in Washington. "State
officials who decide to deregulate before an effective interstate
market exists must accept responsibility wherever a market failure
"Deregulation of electricity (in California) was a disastrous
mistake," said Rosenfield, who originally came to prominence when
he helped win voter approval for California's 1988 insurance
industry reforms. "It must be fixed to protect our health, safety,
our economy and the environment. When we say fixed, we do not mean
a superficial fix that protects politicians and the utility
"Elected officials created this mess four years ago, and it is
the job of Gov. Davis and the (state) legislature to fix it."
Some of the consumer advocates' six points are being made by
other stakeholders, such as refunds to San Diego consumers who paid
retail electricity rates three and four times greater this summer,
but their call for a return to integrated resource planning,
creation of a "state power authority," expropriation of existing
private sector generating facilities and institution of a windfall
profits tax are not so far being formally suggested by any of the
state's other energy stakeholders.
The CFA/CU report recommended four policy areas that need
attention before electric deregulation can move forward:
(1) State measures to prevent consumer abuse.
(2) Assure regional transmission operators (RTO) or other
independent grid operators are focused on the public interest and
the issues of open access and reliability of the system.
(3) Open up generation market through "demonopolization" and
(4) Install effective demand-side management programs.
Richard Nemec, Los Angeles