Winning Grandma Millie’s Vote

“The lawsuit drives home the point that an unregulated energy industry will never provide reliable and affordable power,” adds Jamie Court, president of the Foundation for Taxpayer and Consumer Rights, in Santa Monica.

Meanwhile, two bills already passed in the state Assembly that would loosen market constraints on power companies were delayed by the Senate Energy, Utilities and Communications Committee on Tuesday. Lockyer has taken no position on the bills, but in filing the Enron suit, he lashed out at a deregulated energy system, which is at the core of both. In doing so, he appears to have covered his political bases, should California experience another energy crisis.

The Reliable Electric Service Act, sponsored by Democratic Speaker of the Assembly Fabian Nunez, allows large electricity purchasers to buy directly from unregulated wholesale generators. Nunez says the bill, AB2006, provides incentives for power suppliers to develop new technology and also stabilizes prices for small customers. However, it was partially drafted by Southern California Edison, according to sources in the Legislature, and applies directly to companies that use more than 500 kilowatts of power — not residential users.

A second bill, AB428, introduced by Assemblymen Keith Richman, a Republican from Granada Hills, and Joseph Canciamilla, a moderate Democrat from Martinez, also would allow businesses to buy directly from unregulated power generators. Supporters of the Richman-Canciamilla bill, which Governor Arnold Schwarzenegger is said to favor, argue that the Nunez bill allows for less transparency in the wholesale market. They say it would set the regulatory structure back to where it was before the Legislature suspended market choice for large customers, in 2001. “Edison wants a monopoly system they can live with for the next 100 years,” says a supporter of AB428.

Advocates for both bills emphasize findings of the California Energy Commission that the state could be facing real power shortages by 2006. More generators are needed, many believe, and the short-run dilemma is whether to promote incentives for new energy technology or a stable regulatory environment that protects customers from predators like Enron. Lockyer’s lawsuit makes a weak case for the latter, critics contend, more than it ensures recovery for California ratepayers or places any real pressure on the federal regulatory commission to reverse itself on the issue of refunds.

The question remains whether the lawsuit is too little, too late. “We wish Lockyer had placed the state first in line in the bankruptcy, and we wish he would directly weigh in on the perils of a deregulated energy market,” says consumer advocate Jamie Court. At least the lawsuit sends a message of deterrence to would-be Enrons, he adds, and possibly opens doors for discovery of documents that could lead to more prosecutions. Maybe so. But for the time being, Lockyer is sticking with a more symbolic posture. “There is value to hauling Enron before a California court and getting a judgment saying they ripped us off and owe us money,” says a spokesman for Lockyer.

What Lockyer is not spelling out is the cost and anticipated duration of an Enron lawsuit, and the likelihood that a judgment will not be worth any more than the paper it’s printed on.