Off Peak

September 1, 2000

Wakeup Call in San Diego?

By Regina R. Johnson

In early August, San Diego Gas & Electric's customers—the first in the country to pay market rates—were receiving bills charged at a record 14.2 cents per kilowatt-hour, up from 3.3 cents in May. Gov. Gray Davis was appealing for help from federal regulators, citizens planned a public bill burning, and an independent survey reported that the average price of electricity in the United States was the second-highest among the 14 major Western economies polled—despite deregulation.

At state agencies in California and nationwide, one question was on everyone's mind: Had the state's two-and-a-half-year-old "deregulation experiment" proved a failure? Here's what some of the players were saying.

"San Diego is your Waterloo unless you find a solution for the price increases that are plaguing this region."
-Michael Shames, Utility Consumers' Action Network, in remarks to regulators, SDG&E, and others

"It's a wakeup call for everyone."
-Gary Ackerman, Western Power Trading Forum

"Everyone up here who watches the energy industry sees San Diego in our future-and we're alarmed by it."
-Severin Borenstein, Energy Institute at the University of California Berkeley

"I think what [the market] needs is some fine tuning, but I wouldn't throw the baby out with the bath water."
-Commissioner Henry Duque, California Public Utilities Commission

"Deregulation was a mistake. ...[It's] going to be very difficult to reverse."
-Commissioner Carl Wood, California PUC

"We were promised deregulation would offer lower prices. Instead, we got the worst of all worlds: an unregulated monopoly."
-Harvey Rosenfield, Foundation for Taxpayer and Consumer Rights

"If these prices are reflective of the true spikes that a market would produce, then you have no future."
-State Sen. Steve Peace, key architect of the state's deregulation plan, in remarks to free-market advocates of the ISO board

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