The war is over deregulation and "stranded costs," the megabillions utilities have invested in nuclear reactors and other electric generators that may not be able to compete in an open market. The national fire was ignited in September 1996, when Gov. Pete Wilson signed AB 1890 into law. Passed unanimously by the California legislature, the bill set a January 1998 date for introducing competition into the state's huge electric power market.

It also handed the state's three dominant utilities -- Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric -- some $28.5 billion to subsidize capital investments in generators unable to produce electricity cheap enough to sell competitively in a market increasingly dominated by inexpensive natural gas. In the California market, the investments were concentrated in two nuclear reactors at San Onofre, between San Diego and Los Angeles, and two more at Diablo Canyon, outside San Luis Obispo. According to their owners, these plants would almost certainly shut down in the face of cheaper juice coming from generators powered by methane.

Continue Reading...