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NEWS FROM THE LIBERTARIAN PARTY OF CALIFORNIA
14547 Titus Street, Suite 214
Panorama City, CA  91402
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For immediate release: December 20, 2000
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For additional information:
Juan Ros, Executive Director
Phone: (818) 782-8400
Mailto:director@ca.lp.org
Web: http://www.ca.lp.org
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Libertarians Call for Special Legislative Session on California Electricity Crisis

"The 1996 so-called 'deregulation' law was a joke," announced Libertarian state chair Mark Hinkle. "Calling the current electrical market deregulated is like saying the postal service is not a government agency -- it's absurd."

Consumer advocates and politicians are blaming the 1996 law -- widely described as a "deregulation" law -- for the current problems, which include skyrocketing costs and the threat of rolling blackouts. But such rhetoric displays a lack of understanding of economic principles, Libertarians point out.

"California's electricity market is heavily regulated today and suffers from unforeseen problems of past regulation, make no mistake," Hinkle noted. For example:

• Government regulation created a lack of incentive for energy producers to build new plants in California over the last 10 years -- which in the current restructured market has led to supply shortages
• The few plants that were built, thanks to environmental regulation, use natural gas as fuel -- which is more expensive than other types of power plants fuels such as atomic energy
• Under the 1996 law the transmission of electricity is managed by a government-created agency, the Independent System Operator (ISO), which has mandated price caps on electrical power -- bringing some electrical companies near bankruptcy

So what is the answer? "Rather than return to the disastrous era of government-run utilities, politicians need to finish what they started. The 1996 law only partially deregulated electricity generation, but imposed additional regulations on the transmission and distribution of power while protecting municipally owned utilities from market forces," Hinkle said.

"When demand surges, consumers should pay more for electricity -- but today's prices are highly overinflated due to the regulatory burdens of the current scheme. Therefore, Libertarians call for a special session in Sacramento to rewrite the 1996 law and provide for a truly free electricity market in California," Hinkle concluded.

"The government can give Californians an early Christmas present by finally getting out of the way."