SWEETHEART DEAL WON'T SOLVE POWER CRISIS TO BLOT OUT BLACKOUTS, STATE NEEDS REGULATED, OPEN ENERGY MARKET.

Byline: Keith Richman Local View

CALIFORNIA's energy crisis is not over. This summer, electricity use set statewide records, and with inadequate supplies, we are at risk of recurrent blackouts. Yet partisan, special-interest legislation is not the answer to California's energy challenges.

This session, the Legislature considered two different approaches to California's energy future. A bipartisan proposal I authored with Assemblyman Joe Canciamilla, D-Martinez, would spur new competitive investments in power plants, while ensuring customer choice and the most reliable power at the lowest price. It is consistent with Gov. Arnold Schwarzenegger's plan for a carefully regulated, fair and open energy market.

The competing measure, authored by Assembly Speaker Fabian Nuez, D-Los Angeles, would be a huge leap backward for California. The measure, AB 2006, passed through the Legislature, due largely to the speaker's influence and an aggressive Southern California Edison lobbying campaign. AB 2006 gives utility monopolies a sweetheart deal and creates a market structure with few public checks and balances.

Even worse, the bill allows utilities to pass virtually unlimited cost overruns onto consumers. The last three power plants built in California by the utilities produced billions in cost overruns. By not requiring competitive bidding for new electricity supplies, this measure essentially hands the investor-owned utilities a blank check to spend their ratepayers' money.

AB 2006 is Sacramento business as usual, and that's why Schwarzenegger should veto it. Nuez ignored repeated attempts to craft a consensus proposal, favoring instead special-interest deals, last-minute changes and hastily arranged committee hearings that deny a fair chance for public participation.

California's improving economy consumes more electricity in a month than many countries do in a year - growing about 6 percent during the last 12 months. Just four years ago, our energy crisis painfully demonstrated how shortages create blackouts and high prices. And yet again, California's energy experts are warning that the state risks another supply crisis within the next two years.

So why has more not been done to resolve this looming crisis? Why aren't new power plants being built around the clock to avert this risk? With an issue as complicated as energy policy, the answer to this question is surprisingly simple: No one knows the rules.

Since it takes hundreds of millions of dollars to build a power plant, investors are waiting until the state has a stable and responsible energy policy that establishes a clear market framework.

Most experts agree California needs to build more power plants, and soon. But a market structure that favors monopoly utilities over competitive bidding and customer choice ignores the least expensive way of meeting our multibillion-dollar energy needs.

The best solution for ratepayers, employers and California's economy is a fair market where competition drives down electricity costs. This system would not exclude California's utilities from owning power plants; it would simply require them to compete with independent generators on a level playing field and keep construction and operating costs in check.

A competitive process will ensure the public gets the most reliable power, at the very best price, while shifting the financial risks of cost overruns away from ratepayers and onto private investors. Utilities should not be allowed to make risk-free, high-yield investments, at the public's expense.

A fair and open energy market will also provide a system of checks and balances to ensure ratepayers are getting the most reliable energy at the best possible price. The bidding will be in the open, and the public will know they got the best deal.

It is time for California's leaders to get serious about energy policy. But AB 2006 is not the answer. California needs a consistent energy strategy, built around a fair, open, and transparent market and customer choice. It's the same sensible practices most businesses use to minimize their costs.

Responsible legislators and the Schwarzenegger administration are trying to improve California's business climate and protect utility ratepayers. With a veto of AB 2006, policy-makers can finally advance an energy policy based upon regulated competition instead of monopolies - one that will reduce costs, improve our business climate, create jobs and keep California moving.