Contract Killings


| June 8, 2001


Contract Killings

To fully grasp the causes of California's energy crisis you may need a course in recent state history, a magnifying glass to read contractual fine print, and a dictionary full of acronyms like RMR, ISO, and FERC.

As Jeremy Mullman notes in SF Weekly, the origins of this convoluted affair go back to the mid-1990's when then-Governor Pete Wilson pushed to deregulate the state's electrical industry. Wilson's campaign was draped in the populist propaganda of breaking up monopolies, encouraging competition, and lowering prices. But, as it turns out, monopolies continue, prices are soaring, and electricity in the Golden State is less reliable than ever.

Though the state-wide monopolies were ordered to sell off their power plants to out-of-state companies, the move only resulted in local monopolies who had no interest in keeping prices lower, Mullman explains. And though lawmakers instituted certain checks and balances in the legislation, they also allowed plenty of loopholes.

The Federal Energy Regulatory Commission (FERC) reviewed the contracts signed by energy providers, but did little to repair a system that was soon strung together with string, wire, duct tape, and bubble gum. In short, Mullman writes, the whole California energy deregulation plan was a house of cards built on a slick foundation.
--Al Paulson
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