Colossal Failure by Imbeciles: The Observer – Ukiah Daily Journal

Nearly two decades ago, a monumental decision was made in California that forever changed the landscape of the electrical industry. In 1996, a unanimous vote by the state legislature, consisting of both Republicans and Democrats, led to the deregulation of the electrical utilities. This decision marked a significant shift in how these utilities were managed and operated.

Before this deregulation, California had a long-standing tradition of tightly regulating its electrical utilities. The California Public Utilities Commission (CPUC) served as the watchdog, ensuring fair rates and high-quality service for consumers. This system had been in place for nearly a century, following in the footsteps of leaders like Teddy Roosevelt and Hiram Johnson, who understood the importance of regulating certain sectors of the economy to prevent anti-competitive behavior.

Unfortunately, the unanimous vote in 1996 unraveled this system of regulation, leading to unforeseen consequences. Politicians at the time believed that deregulation would benefit consumers by lowering prices and stimulating the economy. However, by 2001, these so-called reforms had failed spectacularly. Electricity shortages, fraud, and skyrocketing prices plagued the market, leading to two state interventions to bail out the failing utilities.

One of the primary victims of this deregulation was PG&E, whose mismanagement and negligence have resulted in multiple devastating wildfires across the state. Instead of holding PG&E accountable, the CPUC has allowed the utility to pass on the costs of these disasters to its customers through rate hikes. Governor Newsom also pushed through a massive bailout bill to support the struggling utility, further shifting the burden onto ratepayers.

In hindsight, the decision to deregulate the electrical utilities in 1996 was a colossal failure orchestrated by both Republicans and Democrats. What was supposed to be a historic reform ended up causing widespread economic turmoil and hardship for consumers. The story of California’s electrical deregulation serves as a cautionary tale about the dangers of dismantling regulatory safeguards in critical sectors of the economy.