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Master of Disaster 

How Pete Wilson’s energy chief short-circuited the California grid

Wednesday, Feb 14 2001
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SAN FRANCISCO -- It‘s quiet at the roosting place of the architect of California’s failed experiment in electric-power deregulation. Here in San Francisco‘s spiffy Embarcadero Center are the elegant, hushed offices of the globe-spanning, carnivorous-sounding mega--law firm LeBoeuf Lamb Greene & MacRae. Daniel W.L. Fessler, 59 years old, Western-born and Eastern-educated, is a top-dollar partner here.

Mr. Fessler, as it happens, is not available. Nor is he replying to phone calls or e-mail. If you haven’t seen or heard his name in the welter of news reports on the power crisis, not to worry. He‘s barely been mentioned by our out-of-sight, out-of-mind news media. But it was Daniel W.L. Fessler who started it all, not far from here, at the offices of the California Public Utilities Commission (PUC), which, as the appointee of then-Governor Pete Wilson, Fessler ran from 1991 to 1996. Those were the years in which California’s electric-power deregulation was hatched, and the liberal City by the Bay was the seemingly unlikely place where it happened. Here and London, that is.

In 1994, Pete Wilson was embroiled in what ultimately turned out to be an easy re-election campaign, thanks in large part to his championing of the anti-immigrant Proposition 187. In the long run that would a boomerang on him, turning his legacy to ashes, but he wasn‘t thinking about that then. Nor was he thinking too much about electric-power deregulation, which would also boomerang on him, even though top aide Otto Bos spoke of it back in 1991 as part and parcel of their reinventing of a “modern Republican Party,” and Wilson himself strongly endorsed it. “I have concluded,” he declared, fatefully, in 1993, “that the market can be trusted to engage in the planning, development and deployment of electric-generation capacity in California.”

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Wilson, though, was consumed by politics. Thinking about power deregulation was delegated to Daniel Fessler. This U.C. Davis contracts-law professor had no particular background in energy issues, but he was a friend of First Lady Gail Wilson and scored big with the Wilson governorship. A free marketeer from Wyoming, where his father was in the minerals-extraction business, Fessler landed the powerful presidency of the PUC and seats on the state’s Transportation Commission and High Speed Rail Commission.

Like Wilson, Fessler was an Anglophile; his manner was described by one associate as being akin to John Houseman‘s in The Paper Chase. “He enjoyed affecting a mock English accent,” notes former PUC administrative-law judge Sara Myers. Like Wilson, Fessler was a great admirer of former British Prime Minister Margaret Thatcher. Perhaps even as much as Ronald Reagan himself, Lady Thatcher was venerated by conservative free marketeers around the world. After all, she broke the backs of the labor unions in Britain. She also privatized and deregulated Britain’s electric-power market.

So Dan Fessler was off to London. It was to be an exciting and momentous trip.

A junket, actually, sponsored and paid for by the tax-exempt foundation of an outfit called the California Council for Environmental and Economic Balance (CCEEB). CCEEB, which, despite its name, has historically promoted a conventional pro-business agenda, was then headed by former Southern California Edison president Michael Peevey. (Peevey was recently tapped by Governor Gray Davis to negotiate a state bailout of his former employer, a bailout necessitated by the very scheme he helped set in motion. Like they say in Disneyland, it‘s a small world after all.)

Before quaffing the radical capitalist waters in London, Fessler, Peevey and company jetted to Paris for some R&R. Also along were Fessler’s fellow commissioner, Greg Conlon, several legislators led by then Senate Republican Caucus chairman Bill Leonard, a number of top executives from Edison, Pacific Gas & Electric and San Diego Gas & Electric, as well as senior PUC and CCEEB staffers -- a cozy little group fit to chill the cockles of any political reformer‘s or consumer advocate’s heart. And, one might think, stir the interest of the California news media. But no one noticed.

“There were good things for us to learn in England,” says one of the junketeers today, somewhat defensively. Once there, ensconced in a luxury hotel in London‘s posh Mayfair district, within walking distance of the global shopping mecca known as Harrod’s, the group embarked on a worshipful round of meetings and dinners, including one memorable fete at the Grosvenor Hotel, with ranking Thatcherites, free-market economists and Conservative members of Parliament.

The usually aloof Fessler was especially taken with his meeting with Stephen Littlechild, then head of the U.K.‘s Office of Electric Deregulation, and popularly known as “The Regulator.” Littlechild was the czar of Thatcher’s deregulation program, a man who set historic changes into motion by having the ear of a powerful politician. It was a role Fessler could play back home in California.

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