California's crisis notwithstanding, energy deregulation is alive and well in Europe.
Amid a blitz of horror stories about soaring wholesale prices for electricity in California and the near bankruptcy of the state's two largest investor-owned utilities, a key official in Europe predicted further moves toward deregulation.
Loyola de Palacio, European Commission vice-president for energy and transportation, said deregulation of natural gas and electricity has been better than expected for Europeans.
"We have witnessed a drop in electricity prices in almost all member states, for all groups of customers," she said at the Handesblatt Energy Conference in Berlin (OGJ Online, Jan. 17, 2001).
Since implementation of EC electricity and gas directives, she said, two thirds of electricity consumers and three fourths of gas consumers in affected areas now may choose suppliers.
The EC wants the power and gas markets to be fully decontrolled by 2005. Palacio said the commission planned to make further deregulation proposals.
Steady in its support for deregulation, the group recently threatened to sue France and Luxembourg for failing to meet a gas deregulation deadline last Aug. 10.
It faulted the countries for failing to pass legislation opening their gas markets to competition. The scolded governments countered that they had adopted draft decontrol legislation, but the EC noted that the laws hadn't been passed and gave the governments 2 months to make it happen.
Portugal and Germany also missed the EC gas directive deadline and are under close scrutiny (OGJ Online, Jan. 2, 2001).
Palacio indicated the EC would strengthen provisions of the gas and electricity directives that unbundle transmission services from production and sales.
In contrast to the deregulatory swagger in Europe, timidity is sweeping the US.
California's troubles have caused several states to delay or reconsider electricity deregulation and clouded the political waters for deregulation in general.
That's regrettable. As Europe's experience shows, deregulation works well when done properly. The same can be said for states other than California that were early to deregulate. Pennsylvania is the best example. The experience there has been good.
California's problem isn't deregulation. It's a combination of too little generation capacity and a deregulation scheme that didn't really deregulate.
The state has a serious problem and much to fix. But its problems are unique. Other states shouldn't condemn deregulation because of California's mistakes.
Europe certainly isn't doing so.