God forbid we should actually discuss the subject at hand, but I'll do my poor best, if only to confuse people.
The traditional reason for regulation of "public utilities" -- providers of electricity, telephone service, natural gas, and so on -- has been the massive capital investment required to provide these services, and the (in the eyes of many) sheer lunacy of, say, redundant power grids. In addition to the expense and the lunacy, there's the fact that putting together a power grid requires the use of land which simply may not be for sale (sure, the government can pull an eminent domain and give you whatever you want -- but are we still talking about "private enterprise" if that's the case?1) We call these problems "barriers to entry", and here we've got some darned steep ones. Some economists use the term "natural monopoly" to refer to this kind of situation.
Therefore: In these cases, you've got a market with only one seller available to any given consumer, and it's quite unlikely that any competitor will ever appear in a given municipality. That's called a monopoly. Only people adhering to some very strange political religions are going to try to tell you that an unregulated monopoly is better than a healthy competitive market.
In practice, public utilities are not analagous to hot dog stands or gas stations2. Traditionally, public policy in the United States has recognized this fact.
Technologies change, sometimes, but not always and not all of them. Cellular telephones don't require huge webs of copper wire or optical fiber entangling whole continents. They do require some transmitters and whatnot, but it's not on the same scale as the old way. Lo and behold! Cellular providers are competing like weasels. The problem is, they're not analagous to power companies: It's not clear to me that anybody in California is beaming massive amounts of electricity through the air to customers. DSL isn't perfectly analagous either, but it's a lot closer: In fact, smaller DSL providers are having a tough time of it because they're competing against the people who own the wires they're using to provide their service.
If any given consumer in California has only one (1) choice of seller from which to buy his electricity, if there is no competition, then any talk of a "free market" is gibberish. I don't see this question being addressed here. The fact that the current energy crisis is being used as an excuse is of no interest, except to those of us who enjoy watching the ideological acrobatics of the right wing.
The same goes for anyplace else, too: If there's no mechanism in place (or even planned) for retail customers to choose from whom they buy their electrical power, then it's going to be very hard to make a case that deregulation is in the public interest: The rationale for deregulation depends entirely on the existence of a free market. In this case, there isn't one.
1I'm told that it's ungracious to mention George W. Bush's history of abusing eminent domain for the sake of private profit, so I won't.
2Gas stations give us a fine example of happily competitive unregulated distribution of power: This is because the technology is totally different. It's relatively cheap to drive a tank truck on public roads (paid for by our taxes, by the way) and sell gasoline wholesale to anybody who's got a pump and a license. The pump and the license are within reach, too. I buy most of my gas from some guys who take only cash and don't speak much English. They don't need eminent domain to lease a small plot of land on a single street corner. If they raise their prices, I'll drive another block and find another supplier. No problem. My relation to the local electric company is entirely different: I'm not about to go out and string a new set of wires to my apartment if those guys piss me off.