As spring comes to the Midwest and the Northeast, the stakes are far bigger than California. Some 25 other states have passed similar laws deregulating electric power. As these laws take full effect, rising prices and rolling blackouts could move eastward.

In retrospect, the California approach seems breathtaking in its naivete. How could a basic service like electric power, long regulated in the public interest, be turned over to the unrestrained appetites of private entrepreneurs? But, of course, the strategy wasn't naive at all. It was written by and for the power industry. If you are a happy stockholder in one of the big energy generation and distribution companies, like Enron, you can see why.

The details are numbingly complex, but the concept was simple. Public utilities would be divided into local companies that directly served consumers and national ones that generated power and sold it to utilities. Deregulation forced local utilities to sell off their generating capacity and then buy back the electricity.

The claim was that this would increase competition.

What it did was shift price-setting power from regulated utilities to unregulated generating conglomerates.

In California the problem was intensified by a rule prohibiting local utilities from negotiating long-term supply contracts with generating companies. Once supplies tightened in the late 1990s, prices went through the roof.

And in a climate of scarce supply, it became child's play for the big generating companies to manipulate and exacerbate shortages. By early 2001, wholesale electricity prices in California averaged 10 to 20 times their levels of a year earlier.

Unfortunately, deregulation is gradually taking effect in more than two-dozen other states that foolishly followed California's lead. In some states, long-term supply contracts negotiated in the late 1990s are starting to expire. In others, the laws are only just now taking full effect.

But to hear the proponents of the free market tell it, the solution is more deregulation. For example, a Wall Street Journal columnist, George Melloan, blames California's crisis on, of all things, energy conservation - as he sees it, government meddling.

But conservation efforts were well along by the 1990s and coexisted very nicely with a regulated industry that had moderate prices. Melloan further heaps scorn on David Freeman, the conservationist who headed the Los Angeles independent power district. California's Governor Gray Davis recently appointed Freeman to fashion a new energy policy for the state. Nowhere does Melloan tell his readers that Los Angeles is the one oasis in California that still has plenty of cheap power because Freeman is a public power man who once headed the Tennessee Valley Authority, and Freeman had the foresight to refuse to sell off LA's generators.

Indeed, such a disaster is deregulation in California that the Federal Energy Regulatory Commission, a longtime cheerleader for free markets, has just reversed its policy and agreed to impose price caps on electric power in California whenever supplies become too low.

Those who support free markets in the abstract are always shocked, shocked, to find out that industries like electricity are not true free markets. Entrepreneurs in industries that are not naturally competitive can take advantage of their power to manipulate prices and fleece consumers. The brand of economics currently dominant teaches that this sort of thing can't happen because competitors will come out of the woodwork, take advantage of the exorbitant profits, and push prices back down to reasonable levels.

But if you believe that, your prize is a full-fare ticket on the Washington-Boston air shuttle or a California electric bill.

It's easy to open a candy store, not so easy to forecast energy demand and build generators or get landing slots in overcrowded airports. Now we have to learn the lesson the hard way all over again: Many markets work well much of the time, but not all parts of the economy and society are efficient free markets. We regulated industries like electricity and airlines for very good and enduring reasons.

Proponents of universal deregulation are a very powerful alliances between ideological zealots in the economics profession, academic consultants on industry payrolls, corporate moguls happy to gouge the public, and an administration in hock to organized business.

Happily, there are more voters than market-besotted economists and greedy energy barons. But to get reliable electric power, the citizenry first needs to reclaim some political power.

Robert Kuttner is co-editor of The American Prospect. His column appears regularly in the Globe.

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