Darkness at Noon 

Everything Gray Davis touches seems to short out

Wednesday, May 23 2001

After suffering his own personal Pearl Harbor with Pacific Gas & Electric’s surprise bankruptcy declaration last month, California‘s embattled governor is trying to fight back on several fronts. He’d better. A new Public Policy Institute poll shows energy moving from nowhere last year to the most important issue in the state, according to a whopping 43 percent. And only 29 percent approve of his handling of the crisis, including just 32 percent of Democrats. Davis‘ overall job-approval rating is now lower in California than President Bush’s.

In an effort to turn things around, Davis has moved aggressively to position himself as a leading opponent of the Bush administration‘s policies. He is also moving on other new fronts. Not unlike a driver who hits the accelerator and the brakes simultaneously, Davis is moving both toward using dirty fuels to keep the lights on at all costs and toward scheduled blackouts to drive down power consumption and the skyrocketing cost to the state treasury.

Bush and his fellow Texas oil-industry alumnus, Vice President Dick Cheney, finally released their long-awaited energy policy last week, and it was pretty much as expected. A document that reads like a holdover from the 1950s, the Bush-Cheney plan is an unreconstructed paean to fossil fuels and Our Friend the Atom, with a few sops to renewable energy and conservation added late in the day in response to polls, which show conservation and renewables to be very popular. It contains no relief for California, or for rising gasoline prices, and over the weekend Cheney again denounced any price controls.

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Davis seized this opportunity to change the subject from his own stewardship by panning the Bush-Cheney plan, engaging in a brief media firefight with Cheney himself, and becoming the national Democratic Party’s official respondent to the president‘s weekly radio address. (That came about because party leaders, themselves somewhat unclear about energy policy, acceded to the embattled governor’s request.)

All of what he said was very short-term, California-centric and narrowly focused. Davis didn‘t lay out an alternative energy policy; he merely trashed Bush’s and again called for federal price caps. Then he once more raised the prospect of state action against the generators, which was striking because several of his most important advisors had just been dismissing the idea privately.

This raises the question of how seriously the governor‘s rhetoric is to be taken. With Cheney again dismissing the idea of federal price caps, is it just more of the same old rhetoric, or will Davis end up being forced to act? The Public Utilities Commission says it has a number of witnesses who have come forward to tell about manipulation of both power-plant output and maintenance outages to drive up spot-market prices -- all of which may not be illegal under state law. (It looks like it is illegal under the Federal Power Act, but the feds have made it abundantly clear over the past year that they won’t act to stop it.) Perhaps Davis is just trying to refocus blame on Bush and the power companies, and will never pull the trigger.

In a recent press conference following a meeting with power-company representatives -- which the governor said was intended to lay down the law -- Davis spoke about a proposed windfall-profits tax, a means of pressuring generators to cut their prices that most experts consider to be less drastic than seizing power plants. “I said,” recounted Davis, “that as the son of two Republicans it was not in my nature to seek a windfall-profits tax. But I was not ruling it out. My attitude on that would depend on whether or not [the generators] showed good faith. [Davis denounces them regularly.] Then I showed them the picture that I stare at every day of Ronald Reagan in my conference room. I mean, he‘s watching over me.”

The generators probably didn’t feel too threatened by that soliloquy. The showdown seemed to fall short of a face-to-face confrontation. Action may be all they will respond to.

As he ramps up the rhetoric, Davis and the state are also moving in seemingly contradictory fashion, toward both keeping the lights on at all costs and turning out the lights to keep costs down.

The new Field Poll indicates that most Californians continue to view the present crisis as a phony one, manufactured by energy companies to manipulate prices. This will make it difficult for the governor to achieve his conservation goals, which a top state official told the Weekly several weeks ago are higher than announced. All of which leads to the plan for scheduled blackouts rather than rolling blackouts. The idea, first proposed months ago by Los Angeles Times columnist Pete King, has been codified into a proposal by UC Irvine economist Pete Navarro and the United Consumer Action Network. As part of the deal, California, along with Oregon and Washington, would not buy power beyond a certain price. The idea is gaining steam.

This amounts to rationing, so Davis is -- after his fashion -- letting others get out front. Those others include Assembly Speaker Bob Hertzberg (D--Sherman Oaks), Senate energy committee chairwoman Debra Bowen (D--Marina del Rey), a number of Republican legislators and, in what might be a surprise to the Davis team, Republican gubernatorial candidate Bill Jones, who is now running relatively close to Davis in private polls. The Independent System Operator, manager of the state power grid, now controlled by Davis appointees, is easing into it by beginning 24-hour blackout forecasts at the end of May.

Meanwhile, as the politics of scarcity move forward, so do the politics of supply. The new generation Davis predicts for the summer is falling short, so new energy-construction czar Dick Sklar, a former U.S. ambassador to the Balkans rebuilding effort, has convinced the governor to let diesel generators run to keep the lights on during Stage 3 power alerts. This could lead to major air pollution and public-health impacts. Customers with the largest diesel generators would be paid well -- 35 cents per kilowatt hour -- with no review from the PUC.

As the clock ticks down on the troubled deal to bail out Southern California Edison, with no solution yet emerging, Davis is back to trying to get angry alternative power generators, most of them stiffed by the utilities from November to April, to come back online and increase production for the summer months. His newly appointed emissary, former L.A. Assemblyman Richard Katz, told them that they would have to get on board the Edison bailout. This did not endear him to the alternative generators, many of whom loathe the big utility and hope it goes bankrupt.

One thing that has been accomplished is that Davis has moved decisively to remedy any shortfall of spin controllers and Edison alumni. He has replaced his recently departed communications director, former San Jose Mercury News political editor Phil Trounstine (who told the Contra Costa Times that he would not continue advising Davis as a friend, but would be “moving on with my life”), with two Clinton-Gore damage-control experts, Mark Fabiani and Chris Lehane. The two men, who have been working for Edison promoting the bailout deal, will each be paid $15,000 per month, which is more than Davis makes. Davis also hired former Gore deputy chief of staff Nancy McFadden to replace staff director John Stevens, who told friends that working with the governor had left him “disappointed.”

With all this, is it any surprise that L.A.‘s soon-to-be-on-the-loose, super-rich mayor is thinking of running for governor? Dick Riordan gave an interview late last week to the National Journal in which he acknowledged that he is seriously contemplating a campaign. And several Riordan friends have said in the last few days that he is indeed thinking very seriously about taking on the wounded Davis. “He got a great response to his endorsement of Antonio Villaraigosa and had a ball doing it,” one says. Another, however, doubts he will, because of his age and preferred lifestyle-tempo.

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