L.A. Lights Still Shine Amid State Power Crisis

The year began brightly, if profligately, with the Hollywood sign cast ablaze in lights. It was a ceremonial Y2K flourish that put Los Angeles on the map--the one drawn by comedians to pinpoint the places in the world most deserving of ridicule.

The city ended the year looking a little less ridiculous, still profligately burning electricity while most of the rest of the state was being asked to go on an energy diet.

Deregulation, the free-market genie that was supposed to bring utilities’ prices tumbling in California, had just the opposite effect in 2000. Set free from the constraints of state control, the cost of electricity shot through the roof. Power that cost utilities $30 in 1999 cost more than $1,000 in 2000. The state’s biggest utilities, Pacific Gas & Electric and Southern California Edison, warned that they were on the brink of bankruptcy.

The Los Angeles Department of Water and Power, a city-owned utility exempt from deregulation, was having no such problems. Unlike the big investor-owned utilities, which were forced to sell most of their power plants and begin buying power on the open market, DWP kept its plants and had electricity to spare--or, more to the point, to sell in a soaring market.

While DWP’s costs of production rose with everyone else’s--natural gas costs were up sharply--it was never put in a position of running low on power, nor did it appeal to the state Public Utilities Commission for a rate hike, as did PG&E; and Edison.