Renewables split on deregulation vote

A massive high stakes power struggle was under way last month as California neared a vote that could roll back the state's historic electricity deregulation, launched just seven months ago. With less than three weeks to go before the vote on the measure, known as Proposition Nine, opinion polls were inconclusive. Many potential voters questioned in surveys were not aware of the complex issues involved and a low voter turn-out, favouring the status quo, was feared for the November 3 ballot.

The battle lines are far from simple and even renewable groups are split on whether to support Proposition Nine or not. More than $500 million for renewables -- earmarked in the existing deregulation legislation -- is at stake. While the Sierra Club supports the measure, along with famed consumer activist Ralph Nader and environmentalist Dave Brower (founder of Friends of the Earth), other major environmental groups such the Natural Resources Defence Fund (NRDC) and the Environmental Defence Fund are opposing it.

Proposition Nine, it is claimed, would cut electricity rates for residential and small business users by one-fifth by shifting the money "saved" to utility shareholders. It would also halt what backers of the initiative call the $28 billion "bail-out" of the state's three major private utilities, much of which is to cover the utilities' stranded assets, according to its author, Harvey Rosenfield. The most controversial of these is the $5.9 billion invested in the Diablo Canyon, San Onofre, and Palo Verde nuclear plants. The deregulation "bail-out" allows utilities to cover their stranded assets and compensate for the 10% rate cut mandated for ratepayers by issuing $6.3 billion in bonds, a cost that can be passed back to ratepayers.

Those against Proposition Nine argue that deregulation is working well and that altering the rules now -- just a few months after the start of competition on April 1 -- would lead to even more uncertainty. They further argue that Proposition Nine could mean renewables lose the $500 million. NRDC's Ralph Cavanagh says deregulation, as it exists on the books, has actually lead to a renaissance of renewables. More renewable energy plants are being built in California than in a decade, he says, pointing to three green power offerings on the market, all of which require power from renewables -- PG&E's "Clean Choice 100," Edison's "Source 2000" and Green Mountain's "Wind for the Future." Endorsed by NRDC, they are also supported by Nettie Hoge of The Utility Reform Network (TURN).

Ironically, however, she is also a co-author of Proposition Nine and describes California's deregulation as an environmental disaster that allows consumers to buy green while little is truly changing. TURN says the renewables funding provided by deregulation would have been available anyway. As it is, deregulation has placed the emphasis on ever cheaper electricity that is also more dirty. "They can put happy green faces on electrons, but it's really a browner era," she says.

Whether her views and those of others supporting Proposition Nine could be heard by the electorate was uncertain. Opponents of the measure, including the top three electric utilities, were outspending the "Yes on Nine" campaign by an astonishing thirty to one. "It's safe to say this is the most lop-sided campaign this year," said Kim Alexander of the California Voter Foundation. The multi-million dollar no campaign warned that Proposition Nine would lead to higher electric rates, to chaos resulting in higher taxes, and to a loss of confidence in the state's bond market.