It's a pet idea of Gov. Arnold Schwarzenegger and his new chief of staff, Susan Kennedy: Return electricity deregulation to California, and this time do it right.

Their thinking goes like this: The discredited 1996 deregulation plan was sheer foolishness and an invitation to disaster because it tried to combine price limits with total freedom for generating companies to milk the market for whatever they could get. Rather, they believe, the generators should be given free rein without any limits on what they can charge.

But the continuing fallout from the energy crisis of 2000-2001 provides a spate of evidence that any return to deregulation would be an invitation to a future disaster of at least similar scope to the one of five and six years ago, when rolling blackouts became regular occurrences.

The two latest pieces of the puzzle: 1) Houston-based Reliant Resources agreed to settle market manipulation charges from the crisis for more than $500 million, bringing the total in fines and settlements against generators above $5 billion. That begins to approach the $9 billion former Gov. Gray Davis often said was stolen from Californians by electric companies. And 2) Calpine Corp., the San Jose-based generating giant whose stock soared during the crisis, declared bankruptcy and begged a federal judge to allow cancellation of contracts that provide a large part of California's power.

The Reliant settlement puts that firm in the same league with Enron, Mirant, Duke Power and the Williams Companies, all out-of-state firms that have settled claims they bilked Californians when they had the chance. No one asserts human nature has changed since 2001, so deregulating further than today's ad hoc mishmash of regulation and price freedom promises to invite more cheating.

The Calpine bankruptcy, meanwhile, provides firm evidence that deregulation cannot be done without great risk to electric customers. For Calpine, which operates 41 generating plants in California and supplies power to Pacific Gas & Electric, the Southern California Edison Co. and the Northern California Power Agency, now says it can't live with the contracts it extracted from this state in 2001.

But remember, critics lambasted Davis for paying far too much in his effort to secure reliable power supplies for the state from Calpine and others, and he was recalled. Ironically, Calpine now says the very pacts that helped destroy Davis are now killing it. The company claims it loses almost $1.3 billion a year on those contracts.

Of course, that's not actual loss. The big number is derived from what Calpine thinks it could get for the same power -- profit and all -- if the rates factored in today's natural gas prices, which are far higher than what prevailed five years ago. On the other hand, with a decline in domestic natural gas prices likely as the after-effects of Hurricane Katrina wane, the putative loss figures could change.

Thus, the success of any deregulated company depends on wise management foresight. Plainly, Calpine lacked such managers when it signed rigid contracts assuming fuel prices would remain constant.

If electricity had remained regulated, on the other hand, Calpine could not have bought up many power plants it now owns. The firm would never have signed the contracts on which its loss claims are based. It would not have borrowed hundreds of millions of dollars to finance construction of new power plants around the nation.

Rather, most power would still be generated by PG&E, Edison and other utilities, and they would be getting rates that guarantee substantial profits. The pre-deregulation standard was about 14 percent per year.

Regulated electricity, then, is a far more stable and reliable commodity than the deregulated variety. And if power is as much a public need as roads -- and it is -- there's good reason to want it regulated by state government.