California revisited: deregulation is dead, long live deregulation.

California was the state that everyone watched as the electricity deregulation train wreck unfolded, and now by default it's the reluctant poster child for the post-deregulation era.

California's power dilemma has taken on a certain predictability. Just as the swallows return to Capistrano, as soon as temperatures begin to warm in the spring, the California Independent Systems Operator (CAISO) declares its first stage-one electrical emergency of the season. The first alert came this year on May 28, The Sacramento Bee reported. Almost as reliably, official statements are handed out, assuring citizens that the power supply will be adequate--barring unforeseen circumstances--but that conservation would be advisable nevertheless.

Just as predictably, business and trade groups counter that the state still faces a severe energy shortage and call for programs to accelerate power plant construction and reestablish a functional energy market.

The exact nature of that market is the center of debate. The Bay Area Economic Forum (BAEF), in a report issued on May 22, said the state should not give up on competition in the energy market, despite the disastrous results of its first fling with deregulation.

BAEF's report, sponsored by the California Manufacturers & Technology Association, warns that California could face "another energy shortfall" by 2006.

Restoring monopolies

"Restoring utility monopolies would at best return California to a framework that contributed to the high prices and gave rise to the need for restructuring in the first place," BAEF forum president Sean Randolph said in a Reuters news story.