Dianne Feinstein: “a lot has been said tonight. Let me express what did happen. In 1996, the State of California passed a deregulation law.…”

“a lot has been said tonight. Let me express what did happen. In 1996, the State of California passed a deregulation law. Republicans and Democrats voted for that law. A Republican Governor signed the law. The law was badly flawed. It essentially deregulated the wholesale end of power and kept regulated the retail end. That was a mistake. Additionally, it provided that 95 percent of the power of California would have to be bought on the spot or day-ahead market. It prevented the bilateral, long-term contracts which are a key part of the solution for California. And the flawed deregulation plan said that California had to buy power through something called a power exchange, which actually guaranteed a higher price for power. And the plan said that the utilities which had generation facilities would have to divest themselves of those generation facilities. The law was a gamble. It gambled that spot power would be cheaper to buy than the price of bilateral contracts. In fact, that was not the case. There was not enough power supply to meet the demand, so the spot power prices rose dramatically. I am one who strongly believes that you have to fix the marketplace; that you cannot deregulate on the wholesale end and not also deregulate on the retail end. Possible solutions include establishing a baseline rate, or realtime pricing, or tiered pricing, or something else.…”