Two Inland Empire legislators played pivotal roles in bringing electrical deregulation to California.

Assemblyman Bill Leonard, R-San Bernardino, and state Sen. Jim Brulte, R- Rancho Cucamonga, helped shape deregulation and push it through the state Legislature in 1996.

Leonard, then a state senator, sat on the Conference Committee on Energy Restructuring and PUC Reform, which researched and held public hearings on deregulation, setting the course for how the state Legislature would enact it.

Brulte authored the bill, which was unanimously approved by both houses of the Legislature.

Both were involved because of their leadership roles in the Legislature and because they were interested in energy costs, which were hampering business growth in the Inland Empire, Leonard said. Leonard served on utilities committees first in the Assembly then in the Senate.

I couldn't reach Brulte Monday. But Leonard told me California didn't initiate deregulation. In 1992, Congress passed the Energy Policy Act, decreeing the states must deregulate utility monopolies.

The Public Utilities Commission immediately began moving to break up the utilities, and by 1993 or '94 had published a concept paper known as the Yellow Book, Leonard said.

State legislators soon realized that they'd better step in or the PUC -- which was headed toward "instant deregulation," Leonard said -- would choose how to deregulate.

The conference committee developed a slower transition from monopolies to a free market, including more protections for consumers, such as a cap on rate hikes.

Louis Fletcher, general manager of the San Bernardino Valley Municipal Water District, testified at one of the PUC's public hearings at Leonard's invitation.

He recalled that he and other business leaders voiced a number of concerns about deregulation.

"I pointed out . . . that it wasn't going to work because you can't control the price you sell things for and not control the price you buy (them) at," Fletcher said.

Commissioners' minds seemed made up already, he said. "It was like they didn't even listen."

Fletcher also was concerned that the free market would work only if the supply of electricity were plentiful.

"It's the law of supply and demand," he said. "If you don't have more supply than demand . . . you don't have a competitive market."

At the time, state energy regulators were saying there was a surplus of power in the Pacific Northwest, Leonard said.

But the state Energy Commission had slowed the development of power plants. Yet no one foresaw there would one day be a shortage.

Now instead of a free market, the utilities are on the brink of bankruptcy, the state is getting into the business of buying and selling electricity, and the PUC has granted a rate hike.

Does he find that ironic, I asked Leonard.

"It's more than irony, it's stupidity," Leonard said.

"We're compounding our errors" if the state goes into the electricity business, he said, because then it would be against the state's interests to foster competition.

"I don't want them to go bankrupt, but I don't want the state to have a conflict of interest," he said.

In hindsight, Leonard said he wishes there had been more oversight of deregulation starting in 1997.

He wishes he had protested PUC decisions forcing utilities to sell fossil-fueled generators and discouraging them from entering long-term contracts that would have locked in lower energy prices. He also wishes he had spoken out when utility companies started selling off their power plants, something no one had anticipated.

"I thought it was dumb when they did it," Leonard said. "I kick myself (because) I didn't protest."

And he wishes that state officials had paid attention when demand started outstripping supply in 1999, and that consumer groups -- which had been neutral or supportive -- had voiced concerns earlier.

"There's lots of blame to go around," he said.