Utilities, Not Government, at Fault for Prices

* Stephen C. Lee [“Power Supply Timeline,” Letters, Nov. 12] argues that government’s involvement in deregulation is responsible for current power price spikes and increases. Lee is confused. What the government was responsible for, before the existing deregulation, was producing an environment of stable prices with reasonable profits to utilities. That was known as “regulation.”

Contrary to Lee’s claim that “the voters pass[ed] an initiative to regulate the power industry,” that deed was, in fact, accomplished by AB 1890, which was passed by the Legislature in the hurried waning moments before its August 1996 recess. The bill, pushed mightily by the big utility lobbyists, had little public exposure and was not heard in any major committees.

There are many reasons for the volatility of power costs, but government interference is not among them. If government is to be blamed at all, it should be for its abdication of regulatory responsibility.

AB 1890 was driven largely by the big utilities’ desire to unload inefficient generating plants. The cost of these, approximately $27 billion, was passed on to the ratepayers and appears today on Edison and PG&E; bills as CTC, or competition transition charge. Rates were frozen at a high level--50% above the national average--more to assure corporate profits than to protect consumers.

These rates were to remain in effect until March 2002, or until consumers had paid off the $27 billion. When San Diego Gas & Electric sold off its Carlsbad generating plant for more than it anticipated, it paid off the CTC and thus was exempted from the rate freeze. Consequently, its customers took a hit this summer while Edison and PG&E; were unable to pass on the higher power costs.

Consumer groups are developing a ballot initiative for the 2002 election that would bring regulation--and government--back into the picture. Mr. Lee will then have the difficult choice of expressing his anti-government bias by voting against the proposition or for it and continuation of the existing dysfunctional deregulation.

TERRY DE WOLFE

Monterey Park

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