Nevada’s policymakers are scared. The power crisis in California has made the Silver State’s governor, legislators and energy bureaucrats fear voters’ response to a possible Golden State-style electricity debacle in Nevada. But instead of biting the bullet and pushing for the tough but enlightened steps that will avert runaway electricity prices and rolling blackouts, most of Nevada’s decision-makers are leaning toward measures that will roll back deregulation. Their behavior is disturbing, because in the long run, the Silver State is well-positioned to benefit from electric choice. Regardless of whether Nevada embraces or shuns deregulation, the short term will surely bring higher prices for ratepayers—and political risk for politicians. But if the Silver State forges ahead with deregulation and implements all or most of the steps described herein, Nevada can weather the West’s power storm and thrive in an electricity market controlled by buyers and sellers, not politicians and bureaucrats.
California's electricity crisis has given foes of the free market ample ammunition to fire at the concept of deregulation. In Nevada and across the nation, politicians, bureaucrats and "consumer advocates" are pushing to delay-or even scrap-their states' electricity-deregulation plans. Even lawmakers who generally support market-oriented public policy have begun to lose faith in the promise of electricity deregulation. But since California's power market was never deregulated, this concern is unwarranted. Blaming California's crisis on deregulation, as writer Chad Reichle has quipped, "is like blaming capitalism for the poverty of the North Korean people." Herewith, a look at the Golden State's flawed blueprint for consumer choice in electricity, and a description of the four key ways in which Nevada's approach to power deregulation differs from California's experiment.
California’s destined-to-fail restructuring of its electricity market has sent politicians in the Golden State scurrying for cover. As costs soar and blackouts roll across their state, officials are making patently false statements and demanding that neighboring states clean up the mess California’s central planners created. Leading the charge is Governor Gray Davis, who has chosen to obscure the real causes of his state’s power debacle. His dangerous demands and irresponsible rhetoric are sending ripple effects across America. “What's happening here could potentially create a national backlash against deregulation,” says Adrian Moore of the Reason Public Policy Institute, a Los Angeles-based think tank. The crisis is also having a much more direct impact on the residents of the Golden State’s neighbors. Already, utility customers throughout the West are paying higher bills. As governors from throughout the West meet today to discuss the crisis, they should make it clear to Davis that their citizens will not be sacrificed for his state’s folly.