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Despite Crisis, Most Californians Want Deregulation

Despite confusion and uncertainty over the current electricity crisis, most consumers in California favor competition and choice among residential electric utility service providers, according to an analysis.

AGOURA HILLS, California – While more than one half of respondents do not thoroughly understand deregulation, 64 percent believe that the state of California should continue to support competition in the electric utility industry, says the report from J.D. Power and Associates. California recently endured 32 straight days where the electricity supply margin was less than 1.5 percent. More than one half of consumers hold the state accountable for the crisis, and expect state officials to take appropriate action in order to resolve the situation. “Customers blame the power crisis on state-enacted deregulation policies,” says Al Destribats. “They also mentioned poor planning, lack of new power plants and high growth in electric usage as contributing causes.” California consumers report that their average monthly utility bill during the winter increased from $75 in 1999 and 2000 to nearly $100 this winter, an average increase of 33 percent. Seventy percent of respondents expect their utility bill to increase another 27 percent over the next 12 months. “Although there is a lot of confusion over the current crisis, consumers are surprisingly realistic in understanding that this is a complicated problem that will not be resolved overnight,” explains Destribats. The telephone survey indicates that most consumers think the crisis will not be resolved for another 2.5 years, while 11 percent said it will never be resolved. Two thirds of California homes receive their electricity from Pacific Gas & Electric, Southern California Edison or San Diego Gas & Electric. Other major suppliers include two municipal utilities, Los Angeles Department of Water & Power and Sacramento Municipal Utility District. These two providers were exempt from the deregulation program. “Customers of investor-owned utilities have the option to change their electricity supplier; however, only one-third of them understand that they have this option,” says Destribats. “Under deregulation policies, investor-owned utilities were required to purchase their electricity from the short-term wholesale market and were not allowed to sign long-term contracts. As a result, they were forced to pay higher-than-expected market prices and could not pass these costs on to their customers.” Headquartered in Agoura Hills, J.D. Power is a marketing information firm.