Michael O. Leavitt Center for Politics & Public Service

Project Prologue

Electricity

During the Leavitt Administration widespread interest developed in introducing competition in the electric industry. In 1996, the California Public Utilities Commission and the California legislature deregulated California’s electric utilities. Unfortunately, the requirements they imposed virtually ensured failure. For example, they mandated that the utilities divest themselves of their generation plants and prohibited rate increases for residential customers. As a result, the utilities lost control of their costs, which skyrocketed, but could not increase rates to one of their large customer classes to recover their costs. By 2000, California’s largest utility filed bankruptcy and the California plan unraveled. The problem worsened when Enron, a large owner of generating plants in the region, withheld electric power from the market and dramatically drove up the price of power. Enron’s market manipulations only became evident after investigation, but the upheaval caused California voters to recall Governor Gray Davis and elect actor Arnold Schwartzneggar to the governorship.

California’s troubles affected the entire region, driving up costs. In response, Governor Leavitt convened an ad hoc committee chaired by Ric Campbell, director of the Division of Public Utilities, to determine what could be done to increase power supply in Utah. The governor called together all of the state government agencies that deal with energy to cooperate in expediting the processes to bring power to the market to ensure that Utah did not share California’s fate.

In the 1997 general legislative session, Representative Christine Fox sponsored H.B. 313, which created the Electrical Deregulation and Customer Choice Task Force chaired by Representative Fox and Senator Leonard Blackham to study electric deregulation. A provision of the bill suspended a Utah Power rate case the Public Service Commission had begun in order to allow the task force to do its work. Suspended rate case to allow task force to study issue The suspension lifted 60 days following the 1998 general session and the PSC rolled in rates among all states resulting in significant rate reduction. Scottish Power merger with PacifiCorp in November 1999. California deregulation in 1996 and Enron manipulation of the markets contributed to tremendous price increases in 2000.

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Michael O. Leavitt Center for Politics and Public Service