Calif. puts its energy in blame

April 11, 2001|By Jules Witcover

SACRAMENTO -- A blame game over California's electricity crisis is in full swing in the wake of the declaration of bankruptcy by one of the state's two biggest power utilities and a deal by beleaguered Democratic Gov. Gray Davis to avoid bankruptcy by the other.

Pacific Gas & Electric's sudden filing for debt relief has sent charges of deceit and betrayal flying in all directions. Mr. Davis' subsequent deal to buy Southern California Edison's transmission lines as a means of keeping the lights on has cast PG&E as even more of a villain while taking a little heat off the governor, if only temporarily.

Questions already have been raised about whether half a loaf will be enough to feed the state's electricity appetite, with PG&E's transmission lines out of the deal. The matter also faces state legislative hearings, with reservations expressed from leaders of both political parties.

Mr. Davis has said he was blindsided by PG&E's bankruptcy plan even as he was negotiating with Southern California Edison. The bombshell came the day after a Davis statewide television speech telling consumers an average electricity price increase of 25.6 percent was needed to weather the crisis.

PG&E is likely to incur even more public wrath for a move that may be seen as bailing out on its public responsibility to keep its own stockholders off its corporate neck. In a bone-headed auxiliary move, the utility awarded about $50 million in bonuses to 6,000 executives just before its bankruptcy declaration. Mr. Davis jumped on the payouts, saying it was "inappropriate to be padding your pockets and then diving into bankruptcy."

At the same time, press reports around the state indicate that Mr. Davis' television talk on how he was coping with the crisis did not do much to counter a public impression that he has not yet begun to get a handle on the complicated situation. You might have thought that PG&E's unilateral move while Mr. Davis was trying to find a way to keep the two major power utilities going would bring the governor some sympathy as the wronged party. But political observers of his own party say they see little sign of it yet.

Consumers are too focused, they say, on their own present and feared future plight, with a long hot summer approaching. Besides, one says, "he's the governor of the state. They expect him to handle it."

One hopeful possibility, according to some of these observers, is that PG&E's brazen action will spur the California legislature and Mr. Davis to work more closely. A number of bipartisan remedial steps have already been voted, but many in the Republican minority are opposed to Mr. Davis' plan to buy transmission lines and, in effect, have the state run the power operation.

Some restive Democrats, impatient with what they see as Mr. Davis' cautious approach and pace, want to get much tougher on the utilities. Senate President Pro Tem John Burton, for one, says he's opposed to a "bailout" of the sort offered to Southern California Edison, and Mr. Davis should consider seizing some power plants outright to let the utilities know the state means business.

"This is the biggest thing to face the state since the gold rush," Mr. Burton says. California Democratic consultant Gale Kaufman adds: "It's time for some of the legislative leaders to start railing against the industry." One restraint on Mr. Davis may be that, as a prolific fund-raiser, he has gotten plenty of campaign money from the utilities.

For now, the blame game goes on, with not only Mr. Davis and PG&E on the receiving end, but also federal regulatory officials for not stepping in forcefully. Also, the 1996 utility deregulation bill passed by a Republican legislature under GOP then-Gov. Pete Wilson continues to be targeted.

The ultimate California political solution -- a resort to a statewide ballot initiative -- may also be in the cards. The head of the Foundation for Taxpayer and Consumer Rights in the state says his organization may try to put repeal of deregulation before the voters next year.

In the meantime, Mr. Davis, who was sailing smoothly until the lights started going out, continues to face his most severe test. "All problems are opportunities in disguise," he says bravely. But this is one opportunity he'd clearly rather do without.

Jules Witcover writes from The Sun's Washington Bureau. His latest book is "No Way to Pick a President" (Farrar Straus & Giroux, 1999).

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