Schwarzenegger May Return To Energy-Deregulation Model
California, the first state to pull the plug on electricity deregulation, may now be the first to hop back on the deregulation bandwagon under new Gov. Arnold Schwarzenegger.</br></br>Aides to Mr. Schwarzenegger and the governor-elect's own position papers say the new Republican administration will take California back in the direction of open electricity markets, most notably by giving big energy consumers the right to choose among suppliers. Big users were stripped of thatright after Gov. Gray Davis signed $43 billion of long-term energy supply contracts in 2001.</br></br>Those contracts were aimed at stabilizing a market that had been thrown into chaos by a combination of the poorly designed deregulation policies of former Gov. Pete Wilson's administration and aggressive moves by big energy traders like Enron Corp.</br></br>Mr. Davis "let a problem become a crisis," Mr. Wilson, now a top adviser to Mr. Schwarzenegger, said yesterday. The new governor "wants to move to a free market in power. That's still the future for the state."</br></br>Any such move by the Schwarzenegger team will be closely watched by other states. Many states backed away from energy deregulation in the wake of California's 2000-2001 crisis, which brought blackouts and billions of dollars in added energy costs, and felt their misgivings confirmed by this summer's blackout in the Great Lakes region, Northeast and Canada. Mr. Davis's handling of the California power crisis, coupled with the state's mushrooming budget deficit, fueled the recall effort that swept him from office.