State Is Being Plundered by Energy Firms, Official Says

Conservation and long-term power contracts could help solve California’s energy problem, the president of the state Public Utilities Commission told students and faculty Friday at UC Irvine.

Loretta Lynch said deregulation, coupled with the lifting of federal energy price caps, have made California “a hostage.”

“Sellers provide unconscionable prices that have no relationship to demand. California is literally being plundered,” said Lynch, speaking on campus at the invitation of her sister Cecelia Lynch, a UCI political science professor.

The PUC chief credited Gov. Gray Davis with easing the problem by promoting conservation and energy plant construction, and signing long-term contracts set to take effect next year with energy suppliers. She heaped blame on the federal government for what she termed runaway wholesale electricity and natural gas prices.

“The federal market cops decided to leave the beat . . . and speculators moved in,” she said. “You want to gripe to me. Go gripe to Washington.” Federal energy policy, she said, is undermining the state’s economy.

Lynch’s audience, however, challenged many of her statements and offered alternatives.

Business professor Peter Navarro said California cannot wait for Washington to take action, and he disagreed that conservation and new long-term contracts would prevent serious problems. “I believe it’s highly unlikely. We need a backup plan,” said Navarro, who has proposed that a buyers’ cartel set prices for suppliers even if consumers have to face retaliatory blackouts.

Newport Beach economics consultant Philip K. Verleger suggested that the state impose a tax on electricity usage but did not specify how much. Such a tax, he said, would buoy the state’s budget, promote conservation and reduce demand. “You are not powerless against this,” he said.