SACRAMENTO (AP) — The recent blackouts in Los Angeles provided an unsettling reminder of the precarious energy situation California found itself in nearly five years ago, when lights blinked out across the state, costs for buying power spiraled and the two largest utilities flirted with insolvency.

Many experts blamed California’s experiment with a deregulated energy market. Now voters will decide whether to roll back a key part of the state’s deregulation effort and a host of other energy issues during the Nov. 8 special election.

Proposition 80, an initiative pushed by consumer advocates, has several components. It would restrict “direct access,” which allows customers — mostly large commercial users — to choose an electricity service provider other than the consumer’s regular utility. It also would put those companies under the jurisdiction of the California Public Utilities Commission.

Additionally, it would move up a requirement that utilities get 20 percent of their power from renewable resources, from 2017 to 2010.

Supporters say the initiative is the first step toward regaining control of the state’s electricity market since it was deregulated in 1996.

“There is no fixing electricity deregulation,” said Sen. Joe Dunn, D-Garden Grove. “The only solution to our electricity situation is to find a way back to a reregulated system.”

California “can’t go back exactly where we were because we have taken some irrevocable steps, but Proposition 80 is a good first step,” said Dunn, who chaired the select Senate committee that investigated the energy crisis.

The measure is opposed by energy companies that want California to create a competitive electricity market and several renewable energy groups, who fear that it could jeopardize future efforts to expand the use of environmentally friendly power sources.

The biggest donor to the opposition campaign is Constellation Energy Group Inc., which has given $1.3 million to head off what company spokesman Larry McDonnell called “wrongheaded public policy.”

“The PUC has laid out a roadmap to establish viable competitive retail and wholesale markets, and this just guts that process,” he said.

The company has several dozen direct-access customers in California but has not been able to expand that business because of the restrictions on retail competition, he said.

Direct access was a cornerstone of the 1996 deregulation plan and remains a focus of Gov. Arnold Schwarzenegger’s energy policy.

During the energy crisis of 2000 and 2001, direct-access providers passed on rising wholesale costs to their customers, who then fled back to regulated utilities. Utilities’ rates were capped, but they struggled to supply power to their customers.

This led utilities to buy even more power at record-high wholesale prices, which they sold to customers at capped rates — running up billions in debt. Utilities raised consumer rates to pay off their debts over many years.

The Legislature later halted direct access when wholesale prices dropped again and large customers tried to leave the utilities. When those customers fled the utilities, that left residential and small business customers stuck to pay off the debt, said Mike Florio, an attorney with The Utility Reform Network.

Schwarzenegger and PUC President Michael Peevey have made it clear that “they want to move back toward deregulation over time, bringing back direct access,” Florio said. “That would be a disaster.”
The PUC voted to oppose Proposition 80, saying it largely duplicated regulatory measures it already had taken.

Severin Borenstein, director of the University of California Energy Institute, said he was sympathetic to some of the policies but opposed putting the issue on the ballot.

Asking voters to make these policy decisions is “deeply misguided,” Borenstein said. Any changes to California’s energy market should be done in a deliberative manner with public hearings, not debated through campaign slogans, he said.

Dunn agreed but said it was so unlikely that the Legislature would act that putting the decision to voters was the only option. In addition, Borenstein said he doubted the proposition would reregulate energy.

“It restricts the degree of deregulation,” he said. “This is not a big question — should we re-regulate electricity? It’s small policy pieces.”

The issue has yet to catch voters’ attention, a possible indication that memories of the state’s energy crisis have faded. A Field Poll released in early September found that only 17 percent of voters had heard of the initiative. Among those taking an interest, sentiment was nearly evenly divided among those who favored, opposed or were undecided, pollsters found.

The proponents of Proposition 80 are far outpaced in fundraising by their opponents. The No on Proposition 80 organization has raised $1.9 million — mostly from large energy companies.

Supporters have raised just more than $88,000 so far but count among their supporters Alliance for a Better California, a coalition of union groups opposing Schwarzenegger’s ballot initiatives.

That organization is focusing its money and efforts on defeating the other measures and has given a mere $18,900 to the Yes on Proposition 80 campaign.