San Jose Mercury News Thursday, Feb. 22, 2001

By John Campbell

A few weeks ago, the Legislature passed a bill authorizing the state through the Department of Water Resources to buy roughly one-third of all the power used in California. Before that, Gov. Gray Davis was given authority to appoint all of the members of the ISO, the state's electrical purchasing arm.

Now, Davis wants the state to acquire the transmission lines of the major utilities in California and to acquire the rights to the watershed land around their hydroelectric plants. Those hydroelectric plants provide about 15 percent of the state's power now.

Hmmm. So, if Davis gets his way, the state will soon buy or control nearly half of California's power and all the "grid" that moves that power around the state. About the only thing they won't do is read your meter. Sounds like we're most of the way to a "State Power Authority" already with the complete support of our "moderate" governor and Democrats in the state Senate who passed out SB 6X, legislation that would create the innocuous sounding California Consumer Power and Conservation Financing Authority.

So why is this a bad idea? Well, a review of the germination of the current electricity "crisis" is instructional. The "deregulation" law was not deregulation at all. It concentrated more decision-making authority in a few state agencies.

Not the least of these is the Public Utilities Commission, where various bureaucrats over the last few years were convinced that the market price for electrical power was going to go down. They made a number of decisions based on this assumption including the disallowance of long-term contracting for power by the utilities.

They were wrong big time. But in the world of government, they all still have their jobs at the same pay and benefits as always. So they made a $13 billion mistake. This is government bureaucracy! We're not accountable to anybody!

Now in a truly free market, the opposite of the "State Power Authority," no one person makes those decisions. Buyers and sellers competing for your business make their best judgments. If they're wrong, they lose and you take your business elsewhere. There is accountability to the public, checks and balances of the market and it works.

Free markets give you lower cost and better products, as you have seen in computers, long-distance telephone service and any number of other products or services you use daily. Electricity is necessary. But you need food first. Your food is not grown, picked distributed and marketed by the state. But yet it is there, safe, cheap, varied and reliable. State-run monopolies bring you service and cost control like the DMV and CalTrans. All the socialist and communist countries of the world have proven that markets work and state control doesn't.

So why are Gov. Davis and the Democrat leaders in the Legislature leading us down this path? Truly, some of them probably have not read history and do not understand economics. But I suspect a hidden motive for many others. If the state controls your power, it can control even more of your life. The state can charge more to people it doesn't like and less to people it does. The state can tie power acquisition to any number of social, environmental and development projects in order to force the outcome it wants.

So, we can have the inefficiency and intrusiveness of a State Power Authority, which the governor is promoting, or the freedom and wonder of an open market.

John Campbell is a Republican assemblyman from Irvine. He is a member of the Assembly Special Committee on Energy Cost and Availability, and the Oversight Committee on Electrical Energy.

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