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Electric Service Providers. Regulation.
Initiative Statute.

THE QUESTION

Should the state expand its regulation of the electric industry?

THE SITUATION

Most of the electricity used in California comes from large investor owned utilities (IOUs) which are regulated by the California Public Utilities Commission (PUC). Smaller amounts come from largely unregulated publicly owned utilities and electric service providers (ESPs). Customers of ESPs receive their electricity via the local utility's distribution system in "direct access" accounts. Customers are mostly large businesses seeking less costly electricity as well as individuals seeking "green" electricity from alternative energy sources. New "direct access" accounts for individuals were temporarily suspended as a result of the 2000-01 statewide energy crisis.

THE PROPOSAL

Proposition 80 will give the PUC more control over California's electricity providers. It will keep customers from switching from private utilities to other providers. All electricity sellers will be required to use more renewable energy resources, with a goal of 20 percent by 2010 (instead of by 2017.)

Electric service providers would come under PUC control and regulation. Also, the suspension of new accounts for direct access electricity would become permanent. Priority would be given to "cost effective" energy efficiency and conservation programs and "cost effective" renewable resources. Several current PUC practices will be put into law by this measure.

FISCAL EFFECT

The PUC administrative costs could range from very little up to around $4 million annually. Consumers would pay fees to cover the increase. It is not possible to determine the effect of this measure on electricity rates or on state and local government finances. SUPPORTERS SAY

• Proposition 80 ensures that all electricity providers are regulated so traders cannot manipulate the system again. It can correct California's failed experiment with electricity deregulation.
• Requiring adequate supplies for long-term needs provides the market stability needed for investments in new, clean electricity sources.
• Competition between independent generators and utilities will assure low rates for consumers.
• It speeds up the shift to renewable energy and gives priority to energy efficiency programs.

OPPONENTS SAY

• Proposition 80 is the wrong way to make energy policy and it won't prevent another energy crisis
• More regulations could stall investment in the creation of new power plants needed to prevent future blackouts.
• Growth of the alternative "green" energy industry (solar, wind, geothermal) would be hindered by the ban on new direct access accounts.
• Energy policy is too complex for the initiative process and should be developed through a comprehensive approach that includes public hearings.

For More Information

PRO: The Utility Reform Network (TURN), (415) 929-8876, www.turn.org

CON: Californians for Reliable Electricity, (916) 551-2513, www.NoProp80.com

For More Nonpartisan Information

See Smart Voter on Proposition 80.