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GOVERNMENT IS THE MAIN CAUSE OF CALIFORNIA'S BLACKOUTS

    February 1, 2001

    MARINA DEL REY, CALIF.-Today, the Ayn Rand Institute issued the following statement.

    Governor Gray Davis blames the state's 1996 "deregulation" of the power industry for California's blackouts, declaring the program "a colossal and dangerous failure." He's right, but for the wrong reasons. The fact is that no real deregulation took place in 1996. Far from freeing up the electricity market, California legislators delivered a flood of new regulations to replace the old ones. Indeed, government regulation--not deregulation--lies at the heart of California's woes.

    Until 1996, Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric shared a government-granted monopoly over California's electricity market, under the condition that state officials controlled utilities' prices. With the stated purpose of increasing competition and lowering prices, legislators ended this monopoly in 1996, but placed new regulations on the market's "structure," including imposing price caps, forcing the utilities to sell off their power generating plants to generating companies, and eliminating long-term contracts.

    In response, Governor Davis has perversely proposed more government regulation as the solution! His proposal for a government takeover of utilities and power plants is the worst possible answer to getting us out of this government-created nightmare.

    If we want this energy crisis to end--and not to be repeated elsewhere in America--we must get the government out of the energy business once and for all, and demand an immediate repeal of all price controls and regulations that have been choking the national energy industry for decades. California and America need a free market in energy, not more regulations.

    Resident Fellow Onkar Ghate is available for interviews.

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