Several consumer groups last week took steps toward pushing forre-regulation nationally and in states, denouncing efforts toderegulate the electricity industry as flawed.

A new report, “Reconsidering Electricity Restructuring,” wasreleased Thursday in Washington, D.C., by the Consumer Federationof America (CFA) and Consumers Union (CU), pointing to three yearsof power price spikes and brownouts in various regional and statewholesale markets as an indication that supply and demandconditions are not right in the power business.

California’s current struggles are cited by CFA and CU as havinga dampening effect on efforts elsewhere in the nation to open upelectricity markets.

In a separate take-it-or-leave-it gesture earlier last week,California consumer advocates on Nov. 28 handed the state’sgovernor and state legislature an ultimatum to rollback electricindustry restructuring and insert the state in an expanded roleover the development and operation of power plants. If the electedofficials fail to act, the consumer activists plan to put anothermeasure on the statewide ballot in 2002.

The sponsors of a failed 1998 anti-electricity deregulationballot measure, Harvey Rosenfield and Douglas Heller, of theFoundation for Taxpayer and Consumer Rights in Santa Monica, CA,offered a six-point “reform” proposal that is aimed squarely atwhat the consumer activists allege are abuses by the state’sinvestor-owned utilities, merchant power plant operators and stateenergy regulators.

Southern California Edison Co., one of the major architects ofthe state’s 1996 electricity industry restructuring law, quicklyreacted with a prepared statement calling the proposal “misguided”and one that “would hurt consumers and threaten the foundation ofCalifornia’s economic recovery.”

“As California policymakers learned to their dismay, theinterstate market is critical to electricity competition,” saidMark Cooper, CFA’s research director in Washington. “Stateofficials who decide to deregulate before an effective interstatemarket exists must accept responsibility wherever a market failureoccurs.”

“Deregulation of electricity (in California) was a disastrousmistake,” said Rosenfield, who originally came to prominence whenhe helped win voter approval for California’s 1988 insuranceindustry reforms. “It must be fixed to protect our health, safety,our economy and the environment. When we say fixed, we do not meana superficial fix that protects politicians and the utilitycompanies.

“Elected officials created this mess four years ago, and it isthe job of Gov. Davis and the (state) legislature to fix it.”

Some of the consumer advocates’ six points are being made byother stakeholders, such as refunds to San Diego consumers who paidretail 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 existingprivate sector generating facilities and institution of a windfallprofits tax are not so far being formally suggested by any of thestate’s other energy stakeholders.

The CFA/CU report recommended four policy areas that needattention before electric deregulation can move forward:

(1) State measures to prevent consumer abuse.

(2) Assure regional transmission operators (RTO) or otherindependent grid operators are focused on the public interest andthe issues of open access and reliability of the system.

(3) Open up generation market through “demonopolization” and”deconcentration.”

(4) Install effective demand-side management programs.

Richard Nemec, Los Angeles

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