Bill Aimed at Ending Power Deregulation Is Short-Circuited

A bill once touted as an end to electricity deregulation in California passed the Senate as an empty shell on Thursday, but a narrower measure has sailed out of the Assembly with momentum.

The different treatment of the two bills shows the success so far of business lobbyists to preserve a key element of deregulation -- the freedom of big companies to shop around for their power.

Two months ago, state Sen. Joe Dunn (D-Santa Ana) had heralded his bill, SB 888, as a repeal of the deregulation plan that California launched so disastrously in the mid-1990s. He vowed to “end, not mend” a power market experiment that collapsed in 2000 and 2001 with blackouts, price spikes and billions of dollars in higher utility rates.

But Dunn’s bill ran into heavy opposition from business groups. More than 100 amendments were inserted Wednesday in the Appropriations Committee, prompting senators to complain that they could not understand the bill.

Stripped to a powerless expression of intent -- the bill itself says it is “for display purposes only” -- it passed the Senate Thursday without a vote to spare, 21 to 16, and now heads to the Assembly.

It is unusual for the Senate to convert one of its own bills from substance to a hollow shell.

“We have more work to do,” Dunn said.

Meanwhile, a bill by Assemblyman Keith Richman (R-Northridge) that would revive a key feature of deregulation passed the Assembly 67 to 0 Tuesday. AB 428 would allow businesses to buy electricity from companies other than utilities.Richman’s bill upsets consumer advocates who seek a return to the days when three big private utilities, under state oversight, served three-quarters of California’s residents.

“These lawmakers are allowing themselves to be fooled into walking down the primrose path toward another deregulation disaster,” said Doug Heller of the Foundation for Consumer and Taxpayer Rights in Santa Monica.

Representatives of cement plants, steel mills and other big consumers of electricity say they want the savings and innovation that come when companies vie to lure customers away from utilities.

The electricity market in California was opened to competition in 1998, allowing customers of Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric to sign “direct access” contracts with companies other than their utility. Such deals were most popular with businesses and some government agencies.

The state banned the signing of more such one-on-one deals in 2001. Today about 13% of the electricity in the territories of the three utilities is supplied by a handful of non-utility companies.

Dunn’s bill originally would have banned such contracts. Under pressure, he amended it to give the PUC one year to write rules to allow such contracts.

Both Dunn and Richman have been wrestling with the tricky question of how to make sure businesses don’t stick other utility customers with past or future costs when they abandon their utility in favor another power producer.

Under Richman’s bill, a company that uses about as much electricity as, say, a large grocery store could choose to cut its own power deal starting in 2006. If it chose to stay with the utility, it would have to agree to do so for at least three years so the utility could forecast its power needs.

Lawmakers say a compromise bill is likely to be hashed out this summer by a committee made up of members of both houses.

On Thursday, some senators compared voting for Dunn’s bill to voting for the 1996 bill that helped launch deregulation in the first place. The Legislature approved that complicated bill unanimously, though only a handful truly understood it.

“We’ve been down this road this before,” said Sen. Ross Johnson, (R-Irvine). “We ought to know exactly what we’re doing.”