Deregulation Drive Running out of Gas

Article excerpt

Byline: Thomas D. Elias

LOS ANGELES - California has seen no rolling electricity blackouts since late April and has even had to sell off surplus power. But the fallout from the state's energy mess is nevertheless stalling the power industry's national drive toward deregulation, even stopping it in some places.

States like North Carolina, Alabama, Colorado, Indiana and West Virginia, where legislative initiatives toward deregulation were well under way before the California mess began making national headlines, now have seen proposed bills pulled back and study commissions formed instead.

Since March, Nevada legislators repealed a "customer choice" law allowing businesses and consumers to choose the source of their electricity less than two years after passing it, and in Oklahoma, legislators voted down a deregulation plan that once had looked like a lock for passage.

And critics of deregulation are having a field day. "Nowhere has a competitive electric system actually reduced prices for consumers," said Charles Acquard, executive director of the National Association of State Utility Consumer Advocates. "The only way consumers have enjoyed lower prices is where it is mandated by law. When those price caps are lifted, what's going to happen?"

In California, price caps did lower consumer bills for almost two years before the crunch hit last winter. But once shortages struck, prices skyrocketed to levels double or triple what they were before deregulation, in spite of provisions of the 1996 deregulation law that supposedly forbade any price increases until March 2002.

Even in Ohio and Michigan, where ongoing deregulation plans allow consumers to choose among power suppliers, the California headlines are cooling public response.

"The chaos in California has affected customers' opinions," said Robert Tongren, a lawyer for the Ohio Consumers Council, a state agency. "They look at the newspaper or turn on the television and hear about blackouts in California. They're extremely concerned about whether Ohio will be another California."

In fact, California's bloodied deregulation plan also featured consumer choices - but they are no longer available and almost all customers who initially opted to switch away from mainstream utilities are back with companies like Southern California Edison and Pacific Gas and Electric. …