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In a letter to PUC Chairman
Mike Peevey today, Governor Schwarzenegger announced his intention to
send California back into the throes of energy deregulation, putting as
much as a quarter of the electricity system in the hands of unregulated
power companies and unregulated transactions. The Governor said he
supports "allowing large customers to shop for competitive wholesale
power prices" -- meaning that the state's largest business could
purchase the cheapest power, which is controlled by independent power
producers that want to sell to big corporations through unregulated
transactions. That leaves the rest of us poor residential payers buying
the most expensive power.

Arnold may not want call it deregulation, but when the price and supply
of electricity are not regulated by the State, it's deregulation. It's
a policy the state moved away from after the blackouts and price spikes
of 2000 and 2001 because it was clear that the freer the market was the
more all ratepayers became hostage to profiteers.

Arnold's logic for moving backward toward deregulation is that
businesses are frustrated by current energy prices that are too high,
so we should let them go out into the unregulated market and find the
cheapest power. Ironically, the high prices that businesses and the
rest of California are paying are the direct result of the unregulated
market. The high rates are the result of $20 billion in overcharges for
long-term energy contracts signed with independent energy producers
during the crisis, the $10 billion in bailout charges for the utilities
that were socked with manipulated market prices and as much as $15
billion in principal and interest to pay off the short-term gouging of
the state during deregulation. Yet Arnold wants to lower prices with

If Arnold has his way with the legislature, not only will regular
ratepayers end up paying more, but we'll all be more susceptible to the
blackouts and blackout blackmail that came out of the original
deregulation scheme. Regulators have recently warned about potential
energy shortages in the near future -- which makes the market ripe for
more manipulation.

Arnold hasn't said much about what was spoken at his meeting with
former Enron CEO Ken Lay during the height of the last energy crisis (, but his policy statement today proves he at least took away some of Lay's philosophy from the encounter.