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‘DEREGULATION’ REGULATIONS FUEL CALIF. POWER CRISIS


    MARINA DEL REY, CALIF.—Many have blamed California’s 1996 deregulation plan as the cause of the state’s current power woes. This charge is true—because California never deregulated the power industry, said Robert W. Tracinski, an Ayn Rand Institute Fellow and columnist for Creators Syndicate.
    “Blaming ‘deregulation’ evades the fact that California’s deregulation bill, AB 1890, imposed a vast array of new regulations on the power industry,” said Tracinski. “These ‘deregulation’ regulations are the real problem—and they carry a lesson that goes far beyond the immediate crisis.”
    Tracinski said that state legislators based AB 1890 on the principles of antitrust, attempting to create “perfect competition” by preventing producers from producing. The theory was that AB 1890 would so restrict power companies that none could gain an “unfair” advantage over the others.
    Under AB 1890 power companies: - Are not allowed to enter into long-term contracts between distributors and suppliers - Are not allowed to raise rates beyond a legally set cap, because antitrust theory says that prices under “perfect competition” always go down - Are not allowed to integrate their generation and distribution businesses, forcing utilities to sell off many of their power plants and making them dependent on the current prices charged by independent generators
    “All it took for the entire system to fall apart was a shortage in the state’s power supply—thanks to the environmentalists who have successfully stopped the building of new power plants,” said Tracinski. “California is now seeing the results of antitrust theory put into practice—cold and dark cities. But there is a solution to this mess. Expose the fake capitalism offered by antitrust theory, eliminate the ‘deregulation’ regulations, and create a free market for electrical power.”


Ayn Rand Institute Fellow and Creators Syndicate columnist Robert W. Tracinski is available for interviews.

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