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Support Sensible Energy Policy in California
CALIFORNIA ENERGY COMPETITION
A policy movement to deregulate the energy industry began in California
in the early 1990’s. State leaders wanted to establish a more
competitive energy marketplace and provide the state’s consumers with
greater choices. In 1996, the California legislature passed
comprehensive legislation to deregulate energy providers by a unanimous
vote in the state Senate and House. The law’s intent was to “transition
to a more competitive electricity market structure, allow citizens and
businesses to achieve the economic benefits of industry restructuring at
the earliest possible date, create a new market structure that provides
competitive, low-cost and reliable electric service, provide assurances
that electricity customers in the new market will have sufficient
information and protection, and preserve California's commitment to
developing diverse, environmentally sensitive electricity resources.”
Following the enactment of this deregulatory legislation in 1996,
California energy consumers began to enjoy the benefits of increased
competition. Unfortunately, the move toward a competitive energy market
was interrupted by the state’s energy “crisis” in 2000-2001. Several
factors contributed to the problems, including Enron’s corporate
wrongdoing. The blackouts that were widely reported during that time
scared many Californians and their elected officials into thinking that
energy competition was a mistake. This fear of blackouts and corporate
malfeasance has lead to hasty policies being considered today that would
roll back the energy deregulation measures and replace them with overly
aggressive government command and control rules.
Since then several steps have been taken to prevent a future energy
crisis in California. These include both changes in the state of
California, such as the landmark energy efficiency standards adopted by
the California Energy Commission (and strongly supported by CalPIRG)
last December. At the federal level, the recently enacted comprehensive
energy bill will help reduce the risks of recurrence of the previous
energy problems.
The result is that in the current energy environment in California, the
market has stabilized and choices are available to both large and small
customers. Blackouts have not been a problem in recent times. Yet there
are still some who advocate rolling back the deregulatory measures and
once again allowing monopoly energy providers to dominant the market.
AHGA believes that California energy consumers are best served by a
market where suppliers are forced to compete on price for our business
and are also encouraged to innovate new energy alternatives and increase
reliability. Homeowners can benefit from energy competition through
lower monthly energy bills, more choice of energy providers, and the
option of receiving energy from green/renewable sources.
PROPOSITION 80
The opponents of energy competition have put re-regulation on the ballot
in California’s upcoming special election. Proposition 80 is called the
“blackout prevention measure.” In fact, Prop 80 would re-monopolize
California’s energy market and take choices away from California
homeowners.
Prop 80 proponents discount the steps that have already been taken to
prevent the recurrence of the 2000-2001 energy crisis. These include
both changes in the state of California, such as the landmark energy
efficiency standards adopted by the California Energy Commission (and
strongly supported by CalPIRG) last December. (Note: Is there any other
post 2001 CA leg addressing this issue that we can cite as reducing the
current risks?).At the federal level, the recently enacted comprehensive
energy bill will help reduce the risks of recurrence of the previous
energy problems. Thus to the extent that wise policy improvements can
reduce risks of another energy crisis, positive steps have already been
taken.
The poorly written language in Prop 80 creates risky energy policy. This
complex subject should not be left to the inflexibility of the ballot
initiative process. Instead, Californians should demand that sensible
energy policies be constructed through a comprehensive legislative
approach that includes a series of public hearings where all sides can
be heard.
AHGA opposes proposition 80 because it does not help homeowners address
rising energy costs. Instead it takes away the opportunity for
California homeowners to choose who delivers their electricity, leaving
them subject to a single monopoly provider. In addition, while
Proposition 80 supporters claim it will prevent blackouts, there is
nothing that this or any other initiative can accomplish that can
provide a 100% guarantee against future blackouts.
The provisions in Proposition 80 would swing the pendulum too far
towards restrictive regulations. While no one wants a return to the
blackouts of 2000-2001, Prop 80 is an overreaction and does not provide
California with a roadmap to a more affordable and competitive energy
future. There are changes that can be made to California’s energy laws
to protect consumers and promote healthy competition, but Proposition 80
does not offer new solutions. It proposes to simply set energy policy
back a decade.
And if this approach fails, California will likely be stuck with it.
Prop 80 includes language that restricts the state Legislature’s ability
to amend the new energy laws. By requiring legislative supermajorities
to over-ride its provisions, Prop 80 will make it harder to respond in
timely manner to future challenges beyond the imagination of its
supporters.
If Prop 80 passes, it will:
· Limit consumer choice and decrease competition for best prices.
· Discourage business investments and limit the creation of future jobs
in California.
· Eliminate the consumer’s ability to switch from private utility
providers to others electric service providers
· Increase the cost of energy for university systems, hospitals, and
local governments, which will end up being paid by taxpayers.
· Lock in limited renewable energy goals, making it harder for the
Legislature to pass stronger renewable energy plans in the future.
· Be nearly impossible to change. The proposition states that its
provisions can only be amended by a two-thirds vote of the state
Legislature.
Proposition 80 will NOT:
· Lower electricity bills.
· Prevent another energy crisis, and in fact, could stall investment in
new power plants that California needs to prevent possible future
blackouts.
It is no wonder that leading California newspapers oppose the measure.
On October 12 the state capitol's Sacramento Bee opposed Proposition 80
in it's strongly worded editorial
Lights Out on Prop. 80, which follows next.
Editorial: Lights out on Prop. 80
Initiative a dangerous way to go
Published 2:15 am PDT Wednesday, October 12, 2005
Story appeared in Editorials section, Page B6
Proposition 80, an initiative that would drastically alter the
regulation of electricity utilities in California, is a destabilizing
force at a time when the system desperately needs stability. The
initiative touches on issues that deserve some attention. But voters
should be wary of regulating this world themselves, particularly when
the assigned regulators seem to have learned from mistakes of the past
and generally are heading in the right direction.
This initiative is an aftershock of the seismic electricity uproar of
2000 and 2001 that resulted in rolling blackouts, sky-high spot market
prices and bankrupt utilities. The epic mess came after a failed attempt
at unleashing certain forces in electricity's wholesale market in the
hope of lowering the retail prices for consumers. The investor-owned
utilities (Pacific Gas & Electric, Southern California Edison and San
Diego's SEMPRA) sold many of their fossil-fuel-burning generators to
private firms. They were supposed to compete. Regulators, however,
refused to allow the utilities to sign long-term contracts with these
private companies. As a consequence, a huge, flawed spot market emerged,
and it was easily gamed. PG&E declared bankruptcy, and Edison almost
did.
Sell It Yourself
Proposition 80 masquerades as The Solution when it looms as The Problem.
The initiative, for example, would essentially prohibit large users of
electricity from contracting directly with private generators as opposed
to the local investor-owned utility. It would increase regulation of
private companies seeking to compete with the utilities as the
electricity service providers. And it would prohibit any utility from
installing on many homes a "smart" meter that would allow utilities to
increase the price on hot summer afternoons and lower the price during
off-peak hours.
The theory of Proposition 80 is to empower the utilities to better
control the state's electricity future. The problem is that it would
accomplish the opposite. First, there would be uncertainty as lawsuits
challenge the measure. And then the losers in court would undoubtedly
file more initiatives. Utilities and private generating companies would
be reluctant to build new generation until the dust settles, which would
mean more delays and a greater chance of blackouts resulting from too
little supply and too much demand. Beware of the ballot box as a
solution.
The California Public Utilities Commission is on a path to requiring
utilities to plan for adequate generation and to sign long-term
contracts with generators to deliver that power at reasonable prices.
Proposition 80 is a path toward a black box of uncertainty. Vote No on
Proposition 80.
Click here for the full text of Proposition 80.
TAKE ACTION!
As a homeowner, and a voter in California, there are many things that
you can do to make a difference! The following actions can help spread
the word about Proposition 80’s bad ideas:
· Send a letter to the editor of your local newspaper. You can copy
content from above to use for that purpose if you like, and modify it as
you wish. Most newspapers provide an email address to send letters to
the editor in their print version of the newspaper as well as in their
online version if they have one.
· Call, write, and/or meet with local elected officials and their staff.
· Speak out at public events, including professional, political, and
social gatherings.
· Talk to your neighbors about how these strict regulations will impact
homeowners and your monthly electricity bill.
· Most importantly, make sure to vote against proposition 80 in the
special election on November 8th!
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