California Voters Reject Return to "Good Ol' Days"

California voters affirmed they support competition in the state's energy markets.  In the latest election, approximately 65% of voters opposed a ballot initiative that would have banned retail choice, increased state oversight of utilities, and eliminated direct access for those customers not already in the state's program.  The Utility Reform Network sponsored Proposition 80, arguing that it was needed to replace failed deregulation policies and to prevent market manipulation, price spikes, and rolling blackouts in the future.  Had it been accepted, the initiative would have allowed for private energy companies, such as non-utility generators and marketers, to be placed under the jurisdiction of the California Public Utility Commission ("CPUC"), and utilities would have been prohibited from charging prices responsive to demand.

Interestingly, in September, the CPUC unanimously voted to oppose Proposition 80, determining that the initiative duplicated work already in progress at the Commission, and would prevent the Commission from fulfilling the goals it set in its Energy Action Plan II, including supporting the existing competitive retail market and re-opening the direct access program, which allows large commercial energy users to buy power directly from private energy companies.  According to its opponents, the rejection of Proposition 80 will ensure customer choice and encourage development of much-needed generation capacity.