Our view: Initiative offers little change, much risk for consumers

Proposition 80 merits a "no" vote. The initiative, which would tinker with California's sputtering electricity industry, poses considerable risks for consumers in exchange for no chance of helping matters.

We have been critical of Gov. Arnold Schwarzenegger and state regulators for failing to get moving on a comprehensive energy policy. Prices are high, demand for electricity is booming, yet utilities and private energy firms are generally reluctant to invest the billions of dollars required to build enough generators to cope with future consumption. We are running out of power, and nobody is building enough generators.

However, this slowpoke governor and his Public Utilities Commission are generally moving in the right direction. The regulatory commission ordered massive investments by utilities in "renewable" power sources such as solar, geothermal and wind turbines. Renewables must make up 20 percent of each utility's portfolio by 2010. The power is very expensive, but the order will go a long way to weaning California from overdependence on natural gas.

Prop. 80 does little to change this strategy. The initiative also would etch into state law the commission's existing focus on ensuring that utilities have long-term plans to either buy or produce enough electricity to meet the projected needs of their service territories.

The ballot initiative parts company with regulators when it comes to "demand meters," a high-tech solution that bills consumers more accurately and gives them a chance to save money. Because electricity gets very expensive for just a few hours each day, such meters provide incentives for consumers to shift consumption to off-peak hours. Economists say that huge amounts of energy can be saved this way, avoiding the need for billions of dollars spent on new power plants.

Prop. 80 would discourage utilities from rolling out the devices. Initiative proponents argue that the poor would suffer, particularly residents of inland areas where hot weather makes air conditioning more important.

However, consumers already pay substantial subsidies on utility bills to help the poor. By conserving energy when it is needed most, demand meters will lower costs for everybody. This alone is a good reason to reject Prop. 80.

The initiative also would forbid new "direct access" deals, which allow big customers to shop for power outside the utility system. Here again, the commission is already moving toward a sensible approach that will balance healthy competition for utilities with the need to keep large consumers from dumping higher costs onto residents and small businesses.

Indeed, there is nothing in Prop. 80 that backers couldn't get through the Legislature if it made sense. Ballot initiatives are properly reserved for major constitutional changes or as a check on legislatures and governors that run roughshod over public opinion.

Some have called this a "reregulation" initiative. If that was true, then California could have a real debate over the merits of the utility-dominated system of history and some bold, new attempt at deregulation. But Prop. 80 offers no such turning back; it proposes minor, unnecessary changes that would inject more legal and regulatory uncertainty into an industry that hasn't recovered from the 2001 power crisis.

California has arrived at a hybrid system that offers limited competition among the big companies that sell wholesale electricity. Consumers are protected by a thicket of state regulations.

Power prices are too high, and regulators are moving too slowly toward an efficient, market-driven system that will shift more risk onto generating companies and utilities while offering more benefits for consumers.

Yet Prop. 80 does nothing to help, and it certainly would hurt.