Document:California Press Release 2 February 2001 Libertarians Attack Electricity Plan

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14547 Titus Street, Suite 214
Panorama City, CA 91402
For immediate release: February 2, 2001
For additional information:
Juan Ros, Executive Director
Phone: (818) 782-8400

Libertarians attack electricity plan, predict worsening problems

PANORAMA CITY -- Urgency legislation signed by Governor Gray Davis yesterday in an attempt to alleviate California's electricity problems was the wrong solution that increases government intervention in the electric market, puts taxpayers at risk, and will make matters worse in the long run, the Libertarian Party of California predicted today.

In addition, an emergency order issued by Davis, forcing retailers to cut their outdoor lighting in half or face fines of $1,000 per violation, is an affront to property rights and likely unconstitutional, Libertarians claimed.

"With the stroke of a pen, Gray Davis has created a new power company: GG&E;, Government Gas and Electric," said Libertarian state executive director Juan Ros. "Rather than removing the obstacles that caused this mess in the first place, the governor and Legislature have erected more barriers to real deregulation."

The new law, AB-1X, puts California in the business of purchasing electric power and selling it to consumers. Money for the purchases will be raised from $10 billion in bonds and will be repaid by ratepayers. But Libertarians note, the chance that the bonds won't be paid back exists.

"California has just made a $10 billion gamble that rates can be lowered within 18 months," Ros noted. "If the bonds can't be paid back, taxpayers will be on the hook for the $10 billion -- not counting the $600 million that has already been spent buying wholesale power."

The law allows the state to enter into long-term contracts with power generators. "That's ironic," Ros pointed out. "Under so-called 'deregulation,' utilities were prohibited from entering into long-term contracts. Now the state is doing exactly what it told utilities not to do."

Libertarians argue that California should not get into the energy-buying business. "Politicians are taking on risks without any experience in evaluating those risks," said Ros.

Davis's executive order forcing businesses to shut off their lights is equally troublesome to Libertarians. "Forced conservation does not work. Davis is abusing his power by threatening businesses with hefty fines. His order smacks of authoritarianism.

"The Legislature has taken the wrong path in trying to solve this crisis," Ros concluded. "Unless politicians take the bold position that retail price caps must eventually be phased out, more government-created problems will continue to plague unsuspecting Californians."