I recently saw a post on the Anderson Valley Advertiser’s website where the writer blamed then-Governor Pete Wilson for de-regulating PG&E and the state’s two other major electrical utilities back in the mid-1990s.
That post did not even begin to accurately reflect the actual history of electrical de-regulation in this state. What history tells us is an entirely different story, a tale rooted in the collaborating, scheming, and conspiring of the Democratic and Republican Parties to sell-out electrical consumers by eviscerating their sole regulatory Watchdog and Protector, the California Public Utilities Commission (CPUC).
PG&E and the state’s other electrical monopolies are able to operate with a public-be-damned attitude because of this state’s fatal blunder deregulating the electrical industry back in 1996. The real culprits are the politicians who brought us deregulation. The entire state legislature (Republicans and Democrats, the Dems controlled both houses of the state Legislature) voted unanimously to unleash economic havoc on an unsuspecting public. The bi-partisan collaboration between Republicans and Democrats fostered the collapse of electrical regulation that resulted in the CPUC’s neutering from Watchdog to Lapdog.
Those elected leaders, colossal imbeciles each and every one, are responsible for the deregulation fiasco.
Here in Mendocino County back in 1996 most local governments, including the then-Board of Supervisors (John Pinches, Patti Campbell, Mike Delbar, Richard Shoemaker, and Charles Peterson), also went on record unanimously supporting electrical deregulation. The BOS was paid a visit by a PG&E exec who was the monopoly’s point man on the Northcoast. He was also Patti Campbell’s husband, Peter. He was a very amiable, charming Englishman, PBS/BBC-style, and the day he made his deregulation pitch to the Board, he succeeded in gaining their support by charming the monkeys right out of their trees for what turned out to be one of the state’s most prodigious fubars. Yours truly opposed the whole hornswoggle; obviously I charmed no one.
Over the past 25 years, I’ve written probably 80 to 100 pieces on numerous facets of this abysmal story.
Truly great leaders like Teddy Roosevelt, a grand old Republican, figured out a century ago that certain sectors of our economy must be monitored and regulated because the typical forces of the free market could not control the resulting anti-competitive, monopolistic behavior inherent to such economic endeavors. Teddy used his big stick to bust the trusts, which is what folks called monopolies back then. He also brought the monopolies under their first public control.
California Populists, led by Republican Governor Hiram Johnson, in the early 1900s, were rounding up Southern Pacific Railroad and the gas and electric utilities which owned state and local government lock-stock-and-barrel. An aroused citizenry brought the railroad and electrical utility giants to their knees, primarily through the creation of public agencies with broad regulatory authority over those industries. The most important oversight agency created back then was the California Public Utilities Commission (CPUC).
For almost a hundred years, California’s utilities policy was pretty straight-forward. In return for allowing PG&E and Southern California Edison to continue to do business as legal monopolies, their rates and services would be subject to control through the CPUC. That was the basic trade-off. Theoretically, and most of the time in practice, the PUC approved rates charged to the public on a standard of cost-based pricing. Whatever it cost the utilities to actually produce energy was factored into the basic rate, plus a reasonable margin for profit.
A century ago, our political leaders understood that the electric and gas industries were the types of economic endeavors that just didn’t work in the free marketplace. Besides, given the then evolving public investment in critical utility infrastructure, such as dams and related activities for hydroelectric power, it was good public policy to maintain these kinds of private-public partnerships growing out of a regulated environment.
The system was not perfect, but it sure beat the alternative — as we are now learning to our great detriment.
By a unanimous vote in 1996, the entire state legislature voted to kill something that had worked for a century.
By a unanimous vote in 1996, every Republican and every Democrat in Sacramento, decided they knew better than what folks knew — and learned the hard way — a century ago: The utilities have to be controlled by the public because the free market just doesn’t work in certain situations. You might say Californians back in the 1900s “had been there, done that.” They fixed it the first time because it was broke. A hundred years later, an arrogant gang of political hacks broke it because the fix was in.
With the 1996 passage of electrical deregulation, politicians hailed the act as a “historic reform” that would reward consumers with lower prices, reinvigorate California’s then-flagging economy, and provide a model for other states.
By 2001, the “reforms” lay in ruins, overwhelmed by electricity shortages, Enron-type fraud and market manipulation, and skyrocketing prices for wholesale power.
Since then the state has stepped in twice to bail out and shore up this private utility by forcing ratepayers to bear the risks and pay the resulting costs.
The CPUC which is supposed to regulate the utilities for the public good, is instead helping PG&E pay for its wildfire costs by imposing rate hikes on its customers and exposing them to increased risks. Furthermore, Gov. Newsom rammed a massive utility bailout bill through the Legislature four years ago. This bailout re-shaped state law to permanently pass future wildfire liability costs on to ratepayers, transfers the burden of proof regarding utility negligence from the utilities to the people, and suspends public transparency and accountability processes for wildfire bailout decisions.
What this history tells us is that the very people we entrusted to protect us from these types of abuses failed miserably in each and every instance. They’ll keep it up as long as you don’t hold them accountable. They’ll keep it up as long as you keep re-electing them. Keep that in mind when you pay your next electric bill.
Jim Shields is the Mendocino County Observer’s editor and publisher, [email protected], the long-time district manager of the Laytonville County Water District, and is also chairman of the Laytonville Area Municipal Advisory Council. Listen to his radio program “This and That” every Saturday at noon on KPFN 105.1 FM, also streamed live: www.kpfn.org
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