For Immediate Release: August 21, 2001

San Francisco, CA – The expected move this week by the California Public Utilities Commission (PUC), to suspend the right of consumers to “direct access” to electricity suppliers will harm California consumers and further distort the state’s economy and long-term energy market, economist Dr. Benjamin Zycher warned today.

“California cannot have an efficient electric power sector without direct access,” Zycher said.

Direct access is the right of electricity consumers to purchase electric power services from any supplier they choose. The PUC seeks to force consumers to buy power only from the state of California.

“Competitive pricing serves the interests of consumers,” said Zycher. “The state government’s primary interest is not consumer protection, but rather ensuring that the state has captive customers to cover past and future costs caused by misguided public policies. These policies include the past effects of retail price controls and the prices imbedded in expensive contracts,” he said.

Today the San Francisco-based Pacific Research Institute (PRI) released excerpts from Dr. Zycher’s forthcoming study on the California electricity market (fall, 2001) (http://www.pacificresearch.org/). Dr. Zycher is a senior fellow in economic studies at PRI.

According to Zycher’s report:

• Direct access—competition among suppliers—will increase the scope of competitive pricing and service reliability.

• California’s electric power system cannot be reformed toward competitive conditions without direct access.

• Direct access will reduce the degree to which future policy decisions can politicize electric rates.

• By furthering the goals of competitiveness and reliability, direct access will strengthen economic conditions in California.

“Consumer choice is a powerful constraint limiting uncompetitive pricing,” Zycher said. “Direct access constrains government attempts to politicize the rate structure by bestowing artificially low rates upon some consumers and spreading the costs across other consumers, which is highly inefficient for the economy as a whole.”

To interview Dr. Zycher, contact Dawn Dingwell at (415) 989-0833, ext. 136. A copy of the summary of Dr. Zycher’s forthcoming report is available at http://www.pacificresearch.org/.