A Rein on Power Generators

One reason for last year’s electricity blackouts was that a number of the state’s electric power plants were down at one time for supposed maintenance or repairs. But state officials believe that the plants often were taken off line for phantom repairs to create a false shortage to drive up prices.

The state was helpless to do anything about it because the 1996 electricity deregulation law required utilities to sell many of their power plants to independent generating companies and removed those plants from the jurisdiction of the state Public Utilities Commission. When PUC officials went to inspect the plants to see whether they really were closed for repairs or maintenance, they were usually denied access. That raises the question of whether there ever was a shortage of power plant capacity. Once the power companies finally got all the plants up and running, there was plenty of power and no more blackouts and prices began to fall.

Ultimately, the Independent System Operator, an independent body created by the Legislature to broker the purchase and sale of power, estimated that big generating companies that own power plants in California overcharged the state by as much as $6 billion, in large part by creating false shortages and driving up the price to stratospheric levels.

The Legislature must make sure that the state is never again in a position to be manipulated by the power companies. It should quickly pass SB 39xx, by Sen. Jackie Speier, a Hillsborough Democrat. (A double x designates a bill introduced in a second special session.) The measure has passed the Senate but has been held up in the Assembly since last fall, largely because of a personal squabble that had little or nothing to do with the merits of the bill.

SB 39xx is simple and logical. It would allow the PUC to require that plants run by companies such as Calpine and Duke Energy be operated in a way that ensures their “availability to maintain the reliability of the electric supply system,” as it does for those plants still run by the major utilities, including Southern California Edison.

The measure would not place generating companies under state control for rates and power contracts. That authority would remain with the Federal Energy Regulatory Commission. The Legislature already has passed a companion bill, AB 28xx, by Assemblywoman Carole Migden (D-San Francisco), to provide standards for scheduling maintenance.

The power shortage may be fading from the state’s collective memory but much of the tangled mess of the deregulation law remains to be dealt with. It’s time for the Assembly to approve SB 39xx and send it to Gov. Gray Davis for his signature.