Focus Point - California DeregulationCommentary by Pete du Pont
January 29, 2001
I'm Pete du Pont with the National Center for Policy Analysis. California's running out of electricity -- a state so commanding it would have the world's sixth largest economy if it were a country. How come?
Power usage has surged 30 percent in the last decade while power supplies are up only six percent. No major power plants have been built there in a decade because greens have stopped their construction.
Then, the state adopted a regulatory scheme that was half Rube Goldberg half Lenin: Consumer prices were cut ten percent and frozen, but wholesale prices could rise. Thus Pacific Gas and Electric bought out-of-state power for $1.7 billion in December, but could only sell it for $70 million.
Silliest of all, a 1996 law forbids long-term contacts and forces California power companies to buy on the daily spot market, substituting wild price swings for long-term stability.
So a screwball system has lead to huge electricity shortages.
Those are my ideas, and at the NCPA we know ideas can change the world. I'm Pete du Pont. Next time, doing deregulation right.