Ten years ago - at the end of September 1996 - California embarked on an ambitious journey to deregulate the electricity industry. The state's largest consumers sought to bring competition into the state's traditional vertically integrated utility monopolies to lower their energy bills. Businesses, represented by the California Large Energy Consumers Association and the California Manufacturers & Technology Association, had been complaining to the California Public Utilities Commission for years about high rates in California. At the same time, Enron and other utility rivals wanted to unlock the gates of the state's profitable energy business. While attention turned to the cost-cutting benefits of competition, there was no public discussion that deregulation could have the opposite effect: that deregulation could also cause profits to soar and rates to skyrocket, as we now know. No one imagined a decade ago that utilities and their competitors would file for bankruptcy protection - a policy backlash that now accounts for a hybrid market leaning back toward monopoly utilities. Deregulation, developed through the CPUC, began in earnest in 1993. However, commission staff had been cooking it up since the early 1980s. The CPUC released a public paper on deregulation, known as the Yellow Book for the color of its cover, in 1993. The book stated: "California's current regulatory framework is ill-suited to govern today's electric services industry." The commission at the time was all Republican, with president Dan Fessler taking on the mantle of the great deregulator. (Only three years ago, Fessler fessed up to a California audience. "It wasn't supposed to turn out like this - with California consumers doomed to perhaps 20 years of high-priced electricity procured by a state government now accused of having acted in haste to achieve long-term waste," he lamented.) The Yellow Book was followed by the Blue Book a year later with more sweeping conclusions. That deregulation template called for direct access to nonutility electricity suppliers, and for paying off utilities' stranded assets to create a level playing field with would-be competitors. The amount that utilities would have to be paid off in order to compete was pegged at about $30 billion. At the same time, in Sacramento, the Legislature began to explore deregulation. Deregulation moved to the Capitol in 1995, where then-senator Steve Peace headed up the energy committee. A bill was introduced to capture electric deregulation - AB 1890. "Our job is to do God's work," said Peace, not known as a humble politician. Peace, who was also one of the few legislators who knew about energy at the time, led his colleagues on an arduous examination of state energy policy. It led to near all-night sessions, known by lobbyists as the "Peace Death March." He attacked the CPUC for its "self-delusion" for its role in charging ahead with deregulation's underpinnings. In fact, the first item on Peace's agenda was to "Abolish the CPUC." In the end, Peace presented his fellow politicians with a plan that they couldn't refuse - or didn't know enough about to refuse. After AB 1890 became state law, it was open season on the market. The state claims to have lost $9 billion to companies that gamed the system. The state took over procuring electricity through the Department of Water Resources; the state floated the largest municipal bond in history, at more than $11 billion, to pay back the general fund for energy purchases; and former governor Gray Davis, who carried the political baggage of the energy crisis, was voted out of office. The resulting hybrid market - part deregulated, part regulated - remains unstable. The California Independent System Operator is tinkering with the real-time market, the CPUC is tweaking how utilities procure energy, utility affiliates have moved into the power plant business, and on it goes . . .