Californians Return to Old Utilities

Some wanted to support renewable energy sources such as solar power. Others sought cheaper rates. Some just didn’t like the state’s three utility companies. Whatever their motives, most of the more than 200,000 Californians who signed with independent electricity companies are being switched back to their old utilities as the state’s experiment with retail power competition comes to a messy end. “It has effectively been killed in its youth,” said Michael Shames, executive director of the Utility Consumers’ Action Network in San Diego. California’s current energy crisis, which led to rolling blackouts twice last month, has been blamed on limited hydroelectric supplies, transmission problems, aging power plants, and the state’s 1996 deregulation law, which prohibited utilities from passing wholesale costs to consumers. Most independent electric companies began halting their California operations in recent weeks as the wholesale price of power surged beyond the utilities’ ability to buy it. Then Gov. Gray Davis suspended any expansion of retail competition as part of an emergency power law signed earlier this month. For years, California consumers could only buy their power from three utilities — Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric. But in 1998, regulators authorized independent firms to sell energy. The deregulation experiment began to unravel last year as wholesale energy prices skyrocketed. The utilities’ retail rates were capped, although those of independent firms were not. As a result, the independent firms’ customers have seen their bills rise sharply. That turned out to be a hard lesson for Yvonne Gaston, a retired teacher from El Cajon. She signed up with Green Mountain Energy Co. of Austin, Texas, because she liked the company’s use of renewable energy. But her last bill climbed to nearly $600 as she paid 26 cents per kilowatt hour while her neighbors with SDG&E service were charged the capped rate of 6.5 cents. “They should have told me I was going to get this huge, horrible bill,” said Gaston, 60. “I feel like it was a betrayal.” Last month, Gaston dropped her Green Mountain service, just before the company switched most of its customers back to their original utility. Commonwealth Energy of Tustin retains about 70,000 accounts because, early on, it purchased long-term wholesale power contracts that assured it some price stability, spokesman Roy Reeves said. But most of the other independent providers have dropped out of the market, at least temporarily, including,, and New West Energy. Green Mountain’s customer base has dropped from 60,000 clients to about 8,000 who had long-term service contracts. “We’re back to a monopoly,” Green Mountain spokesman Rick Counihan said.

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