We TOLD them so!

The deregulation of the California utility industry has been a smashing failure, as events of this summer have all too clearly shown. Not only has it failed to improve service and reliability to Californians, it has had just the opposite effect: rolling brown outs and soaring end-user prices, just as we predicted.

The harebrained scheme to replace public oversight and regulation of this incredibly important public resource with the so-called wisdom of the free market has proved to be nothing but folly.

A July 6 LA Times report, “Demand for Electricity Tests Power-Grid Operator,” highlighted many of the problems that have grown in the two years since AB 1890, the California law that “deregulated” the state’s electric utilities, went into effect. The article sighted three major areas of concern: Lack of available power to meet peak demands, dramatically higher prices, and growing uncertainty about the future of the state’s electrical resources. It reported the drastic rise in home electricity prices for customers of San Diego Gas & Electric, the first utility to finish selling off its assets and free itself from a freeze on rates imposed by the legislature. Guess what happened. In 45 days, rates went up an average of $47 per month, an increase of 240 percent. The article quoted a consumer activist who predicted that for the rest of the state, this was the “ghost of summer future.” It also quoted DWP GM David Freeman, who called the current state-wide situation the “valley of despair.”

As the investor-owned utilities like San Diego G&E, Edison, and PG&E finish selling off their generation assets to “merchants”—private companies that are virtually free of any obligation except to improve their profitability—they become free to raise their prices in conformity to the dictates of the all mighty market. Not only that, but the companies that snatch up those assets become free of their restrictions regarding workforce and labor issues, so utility workers in the private sector are sweating bullets as they begin to see their jobs erode. When the plan to deregulate California’s electric industry was being drafted, we fought hard to protect public utilities from the ravages that we could see were inevitable, and we were largely successful. The people of Los Angeles and the employees of the DWP are reaping the benefits of this protection today. In fact, we are in an excellent position to capitalize on the chaos that is descending on the state as a whole; the Department is in an excellent position, primarily because we (Local 18) forced them to keep their generation assets. By supporting reasonable price caps, we will continue to make reasonable profits and pay down our huge debt without having to capitulate and join the ISO (which would allow us to recover the cost of “stranded assets”).

But, our success does not change the fact that deregulation was a poorly conceived move that will hurt electricity consumers (that’s all of us!) statewide. It was a bad plan promoted by large industrial customers determined to put the desires of speculators and corporate profit-takers above the interests of the people.

We told them: The system’s not broke. Don’t fix it. They didn’t listen. Now the system is broke and something must be done to avert a statewide energy crisis.

The Democratic National Convention is about to get underway in Los Angeles. For most of this century there has been a clear demarcation between the parties: The Republicans have been staunch supporters of Big Business (see discussion above), while the Democrats have defended the interests of working people. We need to take this opportunity to remind the Democrats that we, the working families of LA, are their true constituents and that we expect them to represent our interests and not become just a second business party competing for crumbs from the tables of their corporate masters. There will be a lot of protests and actions in conjunction with the Convention, and the media will probably focus on the extremist crackpots of the bunch. Don’t be taken in by this. Most of the protests will represent a genuine, much-needed attempt to remind the Democrats that their natural constituency are workers and their families, not the suits in the corporate board rooms.