Deregulation of Public Utilities in California

California's electricity rates are about 50 percent higher than the national average. When the PUC deregulated long-distance telephone calling during the 1980s, rates dropped over 60 percent. Natural gas deregulation during the 1980s brought savings of over $80 billion dollars to consumers (Parrish, 1994, p. A16). The PUC's goal in making the electricity industry more competitive is to cut costs and improve delivery of service: "Rather than continue micro-managing utility companies' business decisions--and risk dictating bad policy--the five members of the PUC prefer to let the marketplace have its way with the states power and telecommunciations industries" (p. A16).

The PUC's current regulatory environment is based on the troubled economic conditions that existed during the period between 1966-1981. This period was plague

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erized by both. In 1990, American utilities spent over $2 billion on DSM programs. Among the most ambitious utilities are the New England Electric System (NEES), Boston Edison Company, and various California utilities (Cicchetti and Sepetys, 1995, p. 42). The NEES effort, entitled "Partners In Energy Planning," is a five-year program initiated in 1987 with a goal of saving 300 MWs. The goal for the first five years of Boston Edison's program is a savings of 117 MWs and 1,167 gigawatt-hours. California's program calls for the expenditure of $560 million in energy efficiency R&D over a two-year period (p. 42). California also seeks to remove its public utilities from the new generation business. A step in that direction is the California PUC's efforts to privatize the electricity industry, a move which has generated substantial opposition. Some economists maintain that public utilities constitute natural monopolies and that privatization is impractical. In general, the rationale for public utilities as regulated monopolies rests on the importance of these industries in the economic infrastructure. The size and growth of local and national economies depend on public utilities and vice versa: "As general economic growth p
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Approximate Word count = 3284
Approximate Pages = 13 (250 words per page)