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Apr 28, 2004 - 02:00 PM

Camera! Action!.. No lights?

by Doug Heller
In a letter to PUC Chairman Mike Peevey today, Governor Schwarzenegger announced his intention to send California back into the throes of energy deregulation, putting as much as a quarter of the electricity system in the hands of unregulated power companies and unregulated transactions. The Governor said he supports "allowing large customers to shop for competitive wholesale power prices" -- meaning that the state's largest business could purchase the cheapest power, which is controlled by independent power producers that want to sell to big corporations through unregulated transactions. That leaves the rest of us poor residential payers buying the most expensive power.

Arnold may not want call it deregulation, but when the price and supply of electricity are not regulated by the State, it's deregulation. It's a policy the state moved away from after the blackouts and price spikes of 2000 and 2001 because it was clear that the freer the market was the more all ratepayers became hostage to profiteers.

Arnold's logic for moving backward toward deregulation is that businesses are frustrated by current energy prices that are too high, so we should let them go out into the unregulated market and find the cheapest power. Ironically, the high prices that businesses and the rest of California are paying are the direct result of the unregulated market. The high rates are the result of $20 billion in overcharges for long-term energy contracts signed with independent energy producers during the crisis, the $10 billion in bailout charges for the utilities that were socked with manipulated market prices and as much as $15 billion in principal and interest to pay off the short-term gouging of the state during deregulation. Yet Arnold wants to lower prices with deregulation.

If Arnold has his way with the legislature, not only will regular ratepayers end up paying more, but we'll all be more susceptible to the blackouts and blackout blackmail that came out of the original deregulation scheme. Regulators have recently warned about potential energy shortages in the near future -- which makes the market ripe for more manipulation.

Arnold hasn't said much about what was spoken at his meeting with former Enron CEO Ken Lay during the height of the last energy crisis (, but his policy statement today proves he at least took away some of Lay's philosophy from the encounter.

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