The Real Energy Solution

Ronald Reagan, bless his perpetually wagging head, had a childlike devotion to the notion that "deregulation" was the castor oil of the American economy. From S&Ls to airlines, from telecommunications to energy, just give corporations a big dose of Dr. Reagan's deregulation elixir and, by golly, the system would miraculously unclog. He liked to call it "the magic of the marketplace."

Apparently, no one ever told Ronnie that magicians don't actually perform "magic" -- they perform illusions. Deregulation of the S&Ls cost us taxpayers a bailout of half a trillion bucks, deregulated airlines are a traveler's nightmare, our phone bills are higher and the service worse as a result of dereg, and you can ask Californians about the joys of a deregulated electric-power industry.

The problem is not with deregulation per se, but with deregulation linked to corporate gigantism. In theory, deregulation brings new entrepreneurial competitors to the market to offer more consumer choice, drive down prices, provide service with a smile, and cause the bluebird of happiness to trill across the land.

In practice, however, de-reg has led not to competition, but to consolidation, leaving us at the mercy of huge monopolistic corporations that stomp on competitors, reduce choice, raise prices, snarl at customers, and throttle the bluebird of happiness.

The mess of energy deregulation in California has been widely reported -- a crucial shortage of electrical power, rolling blackouts, the tripling of customers' electric bills, billions of dollars in economic loss, layoffs, crisis management, emergency legislation, etc. Worse than the mess, however, are the "fixes" being pursued in a cabal of ignorance and arrogance between government and the privately held utilities.

California's energy problems -- now spreading into the upper plains, Midwest, and Northeast -- are not the result of glitches in the system, but of the giant, cumbersome, inefficient, costly, anticompetitive system itself, which is operated not for the needs of people or the environment, but for the profits of a handful of utility behemoths.

The Four Faux Fixes

First came the "Bailout Fix." California's two biggest utilities, Pacific Gas & Electric and Southern California Edison, went running to the state legislature crying "save us" from the very deregulation plan they had written and gotten passed only three years earlier. "We're going bankrupt," they wailed, demanding massive rate hikes to stick consumers with the cost of the utilities' own mismanagement and corporate chicanery. PG&E claimed at one point that it had only $500 million in the bank and debts of $2 billion. What it didn't mention is that PG&E is not just a California utility, but a multinational conglomerate, and its other subsidiaries are rolling in money.

But last year, three days after Christmas, the conglomerate quietly got the Federal Energy "Regulatory" Commission (FERC) to allow it to alter its corporate structure to insulate the bulk of its revenues and assets from the possible bankruptcy of its California utility. Despite dodging its financial responsibilities, PG&E still got the rate hike it wanted from the legislature.

Next came the "Unchain Us Fix," in which the very corporations that made the energy mess demanded to be free to make an environmental mess. If only we weren't shackled by these damned antipollution laws, went the plea, then we could really crank up our old, belching power plants and "save" the people from this energy shortage.

Sure enough, state and federal officials loosened the rules, the plants are spewing more pollution, and both smog and air-pollution-related health problems are up in California.

Never one to miss a chance to kiss corporate butt, George W. Bush is using California's plight to unchain some of his largest campaign contributors. To cope with the electric-power crunch, W. insists that his Big Oil pals need to be turned loose in the pristine Arctic National Wildlife Refuge to drill, pump, and pipe crude.