Energy Deregulation

As we have witnessed the rolling blackouts and emergency alerts throughout many parts of our state of California within the past 12 months, there is a question waiting to be answered. Why do we have an energy crisis when there are other states that are doing just fine? Before we come to any hasty conclusion, let us ask ourselves what happened to the energy policy during the mid 90s? During that period the electric utilities went from being highly regulated to being deregulated following the trend in successful deregulation of many industries such as airline and telecommunication industries. The concept that deregulation will bring more competitive prices and better services to the public, undermined the negative potentials of the free market system. Deregulation bill must be abolished because it brings higher electricity prices, lower reliabilities of electricity, and also it threatens to drag down our economy along with it.

First, we have seen a nation-wide increase in both wholesale and retail electricity prices. In California as an example, the wholesale prices increased seven times last year compared to 1999 (Kahn and Lynch 13). The average residential electric bill almost doubled from $40 to $80 in San Diego when the SDG & E’s retail price freeze ended in June 2000.1 According to Washington Governor Gray Locke, “the whole energy prices have gone up from ten to twenty times the prices of a year ago (1). In New York, more specifically in New York City and parts of Westchester County which are one of the first areas in the country to deregulate retail prices entirely, the retail rates have increased almost 30% (Eisenberg 47). This is bad when you consider that ones that are going to be most hurt from these unreasonably high electricity prices will be the individuals and families that are in the low-income bracket.

Second, the reliability of electricity was compromised throughout many parts of our state, affecting both residential and business sectors. On June 14, 2000, about 100,000 customers were blacked out in San Francisco Bay Area (Kahn and Lynch 9-10). According to Lorenco Goncalves, the CEO of California steel industries, “We were interrupted 14 times this month [January] compared to not once from 1987 to 1998. So many other industries depend on what we send them…If they can’t depend on my products, they will [buy them] elsewhere” (Wood and Sherer). These uncertain interruptions are causing a lot of damage in our economy.