Staying plugged in

January 24, 2001|By Ralph Brave

WHAT CAN Maryland learn from the California energy crisis?

Deregulation of the electric market is a disaster, and there is a very simple, straightforward lesson to be gained from the California experience: Do not give up power over your power supply.

It doesn't require an expert in economics or electrons to understand this. Electricity is the foundation of much of our way of life and of almost our entire economy. Whoever controls that electricity controls much about our lives, including our economy.

Specifically, retain control over the supply of electricity through long-term planning for adequate supplies and the prices generators of power can charge customers.

The deregulation measure passed in Maryland, like that in California, was the result of corporate greed. Large industrial users of electricity wanted out of a regulated system in which they paid their fair share, so that they could make independent deals with power generators, leaving residential and small-business users behind to pay the hefty prices of a collapsed system.

What we are witnessing in California is the logical result of this narrow greed gussied up as a fetishism for privatization.

While Maryland's law, like that of more than a dozen other states that have also enacted deregulation, differs from California's in a variety of ways, the fundamental structural feature that has caused the crisis remains the same: Give up power over your electric system to someone else, and you necessarily give them decisive power over your basic ability to function.

Today, power suppliers to California can charge whatever they want or withhold whatever they want. And they've been doing it. The free market's invisible hand is in the cookie jar, and the only strategy consumers have to counter it is to hope for mild weather.

Eventually, under deregulation, the same crisis will hit here. It may not be next year. But it will come. We should not expect or depend on corporate officers to exercise self-control over their own institutional drive for maximizing profit.

The original rationale for regulation of electric supply remains valid today: Without regulation, the generators of power have a chokehold over every user. Electricity is a commodity, but we long ago accepted that it is also a public service. While the large industrial users thought they could get away from that reality, just ask Intel and other Silicon Valley firms how much they've benefited from deregulation.

While we shouldn't hope that state politicians will metamorphose into creatures of courage overnight, perhaps their fear of political fallout will help. . Take the example of California Gov. Gray Davis.

Shortly after the November election, the Democrat appeared on every pundit's short list as a potential presidential candidate in 2004. While he may yet emerge as White House material, just two months later the results of deregulation have him fighting for his political life, trapped among betrayed consumers, bankrupt utilities, predatory power generators and a hostile incoming Republican administration in Washington.

The regulation of utilities such as Baltimore Gas & Electric was never a perfect arrangement. But it provided minimal leverage to give some measure of control over our electric supply and costs, and thus over our economy and our future.

With deregulation, we lose that. Without corrective action, we will some day pay the price for that loss.

Ralph Brave, a Baltimore native, is a Davis, Calif.-based science writer who has been a researcher on energy policies of the state of California and the Sacramento Municipal Utility District.

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