HOW TO GIVE DEREGULATION A BAD NAME

By Larry Stirling

The electric rate crisis has been misnamed, and is due to blatant incompetence by our representatives.

If it were not such a serious a matter, it would be a "hoot" to hear that a liberal Democrat such as Dede Alpert, who has already voted to butcher our power-supply system, now intends to introduce legislation to stop "profiteering."

Mrs. Alpert's response to the current situation is entirely predictable because the State Chamber of Commerce already records her votes as nearly 80 percent anti-free enterprise.

Her voting record resembles another great liberal, Sam Rayburn, whose hostility to people who don't work for government, got us into this energy mess in the first place.

It has been the State and local governments' desire for the last hundred years to "avoid profiteering." That is why California has operated under a Russian-style power arrangement for so long.

And now the legislative fix, which they have mislabeled "deregulation," is an incoherent failure and anti-supply and anti-market in its practices thus resulting in shortages and high prices and severe hardship on those that can afford it the least.

It is the very nature and purpose of monopolies to create high prices and shortages and it should come as no surprise to Dede Alpert or any one else that their handiwork has wrought such a result.

The legislature was correct to attempt break out of the energy "coffin corner" that they had gotten us into. The problem is that instead of "deregulation" they crafted a radical regulatory cure is way worse than the disease. Mrs. Alpert's proposal will make nothing better and everything worse.

It may well be that the greatest casualty from the current war of words involving the states electrical energy supply is the concept of "deregulation" itself. Exactly as the term "free trade" was lost in the NAFTA debate. There is precious little that is "free" about trade inside the NAFTA area.

Wouldn't one think that if something were "deregulated" that there would indeed be less regulations? Far from it. The current legislative scheme is so complicated that almost no one actually understands it.

The world of power purchasing and buying was always remote and arcane. But at least under the old system, San Diego Gas and Electric was able to buy and sell electricity. However, under the current so-called "deregulated" approach that authority has been taken from them and they have to buy power through a "power exchange." That puts them at the mercy of every producer including the venal conduct of our neighbors to the north the Los Angeles Water and Power Department that is profiting mightily at our distress along with the Federal WAPA. In addition, they were forced to sell generating facilities, the very resource that could have insulated them from being victimized by Federal and municipal generators.

I worked for a wheat farmer in Texas in my distant youth who harvested his wheat and secretly stored it in temporary bins on his own property waiting to see direction of the wheat market and the government "parity" prices. He outsmarted the government every time.

I once asked a broker on the floor of the New York Stock Exchange why they don't simply automate all of this and avoid this crowd of people and all this trash on the floor of the stock exchange. He looked at me kindly and said "if you automated the whole thing, wouldn't you then be bidding against yourself?"

Farmers and brokers, both who have to earn their living in the market place, know what the Democrat- controlled legislature does not know about the market. That is a subtle, complicated, and high stakes process best left to those who know how to work it.

Were there no California Public Utilities Commission (CPUC), and no Federal Government Western Area Power Administration (WAPA) controlling Federal hydropower and no California State Energy Commission, there would have long since been an adequate supply of reasonably priced energy available to the people of San Diego.

Instead, we are in the ridiculous position of being American citizens who are not allowed by Federal Law to obtain inexpensive hydropower for government-owned dams that we paid for. (Incidentally the inexpensive Federal hydropower goes in substantial part to Los Angeles Water and Power that has been crowing of late about its tremendous success. Some success, the Federal government builds and dam and gives them cheap power. They in turn wait until we are desperate and then sell it to us at high prices.)

And if it weren't for the current law, somewhere between 25 and 30 percent of the power actually generated INSIDE the state of California by municipal utility districts would be available to purchase on the open market. Instead, LAWP is digging itself out of a four billion dollar debt by lying low each day, keeping its power capacity off the market and then victimizing San Diegans with high-cost power when they need it most. And thanks to the legislatures view of "deregulation" SDGE cannot sell power into the LA area.

The time has passed for finger pointing. Every legislature passes laws that have "unintended consequences." The real sin is not in correcting the mistakes once they become apparent.

The UCAN organization over nine months ago warned that legislative scheme, clearly mislabeled "deregulation" was not working. The current legislative error is in not moving to fix the problems once later information made clear was occurring.

The legislature should know, and apparently still doesnt, that the only way to reduce costs, is to increase supply. There is much supply currently available but misdirected because of the current legislation.

First, get the power exchange out of the picture. Utilities are quite capable of buying and selling power on a bilateral basis.

Second, make the municipal utilities operate under the same rules as the investor-owned utilities. It is certainly wrong for the legislature to protect and subsidize public institutions, while it cripples and incapacitates investor-owned utilities and then claim the private business cannot do the job.

Third, the legislature should dissolve the Energy Commission. First it is duplicative of the efforts of the CPUC, but primarily because the Commission has failed to assure the people of California an adequate and appropriately priced energy supply.

And finally, the legislature should immediately adopt fast-track approval for the construction of new energy sources.

It is the ultimate ruse for government to screw things up and then say that the cure is more government regulation.

It is time for some big changes in Sacramento. When elderly people cannot turn on their air conditioning and are subjected to life-threatening conditions or budgetary disaster, the government of, by, and for the people needs a fundamental change. Sincerely, Larry Stirling