Consumer advocate eyes initiative on deregulation

The Associated Press
Wednesday November 29, 2000

SACRAMENTO — A consumer group outraged at spiraling electric bills wants to put a ballot initiative before voters that would reverse the 1996 law deregulating California’s power industry. 

Harvey Rosenfield of the Foundation for Taxpayer and Consumer Rights said Tuesday the initiative would place electrical utilities under the authority of a citizens’ review board and set up a public agency to operate the state’s power grid. 

Utilities denounced the plan, saying it would create a new bureaucracy but do little to develop energy supplies. 

“Deregulation can work if all parties – the regulators, the out-of-state generators, the consumer groups, the utilities – work together appropriately,” said Pacific Gas and Electric Co. spokesman Ron Low. 

Rosenfield’s proposal came just days after California’s two largest investor-owned utilities, facing more than $5 billion in losses since May from increases in wholesale electricity costs, sought court permission to pass those costs on to ratepayers. 

The utilities “have now all announced that they intend to force the people of California to pay an additional $5 billion or $6 billion, roughly $200 for every taxpayer in the state to bail them out of a problem that they themselves created,” Rosenfield said. 

California’s 1996 deregulation law was intended to lower rates by boosting competition in the electricity market. It required investor-owned utility monopolies to sell off assets, including power plants, and buy electricity on the open market by March 2002. 

Until the assets are sold, the utilities operate under a rate freeze. After the assets are divested, the rate freeze cap comes off and the utilities can charge their ratepayers market prices. 

San Diego Gas and Electric Co., with 1.2 million customers, was the first, in July 1999, to complete the transition to deregulation. 

When wholesale electricity prices, driven by rising demand and strapped supplies, soared this year, SDG&E passed on the increases to its customers. Bills there doubled, then tripled, sparking a political outcry and state and federal investigations. 

Pacific Gas and Electric Co. and Southern California Edison Co., which have 9.7 million customers between them, still operate under a rate freeze but they are trying in the courts and the Public Utilities Commission to remove it.  

The two utilities are unable to pass their costs on to their customers. 

Rosenfield’s proposed ballot initiative also would require refunds to consumers in San Diego and levy a windfall profits tax on power companies that sold energy to utilities at “unjust and unreasonable prices.” 

It would also set up a public agency with authority to build, own and operate power plants, transmission lines and distribution assets. 

“At first glance, he appears to be making some positive points, such as the refunds to San Diego customers,” Low said. “But we don’t think setting up a new bureaucracy is going to help solve the problems.” 

Rosenfield will have 150 days to gather signatures to qualify his measure. A statutory initiative would require 419,260 signatures of registered voters. An amendment to the constitution would require 670,816 signatures. 

On the Net: 

Foundation for Taxpayer and Consumer Rights: http://www.consumerwatchdog.org/ 

Pacific Gas and Electric Co.: http://www.pge.com/ 

Southern California Edison Co.: http://www.sce.com/ 

San Diego Gas and Electric Co.: http://www.sdge.com/ 

Public Utilities Commission of California: http://www.cpuc.ca.gov/