Davis Needs to Respond Boldly to Energy Crisis

The public paid and paid dearly [and] is beginning to understand the need for [utility] reform after [being] fleeced out of millions of dollars.

--Franklin D. Roosevelt, 1932 speech in Portland, Ore.

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David Freeman is an FDR disciple, a lifelong advocate of public power. He now is general manager of the L.A. Department of Water and Power, but previously headed two of Roosevelt’s legendary creations: the Tennessee Valley Authority and the New York Power Authority.

And thinking about the unconscionable mess in which California’s private utilities, their customers and Sacramento politicians now find themselves, Freeman has some advice:

“You ought to be telling Gray Davis that this is 1933 and he needs to think like Franklin Roosevelt. Either he thinks like Franklin Roosevelt or he becomes Herbert Hoover.

“This could be his road to the White House.”

Or, Freeman implies, it could be an errant road off a cliff.

Hoover may not have caused the Great Depression, but he reacted timidly and generations of voters have blamed him. Angry Americans swept Hoover out of the White House and installed Roosevelt.

Nobody is suggesting Gov. Davis is in Hoover-like trouble. But he is up for reelection in 2002. This is his first big test and he’ll be graded by voters. Although Davis inherited disastrous deregulation, Californians do expect him to fix it.

Better yet, if possible, just junk it. Don’t try to fine-tune. Tear down and overhaul.

Forget, for now, the carefully crafted image of cautious centrism.

Says Freeman: “There ain’t no middle on this issue.”

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Freeman, 74, is a highly successful and colorful public power executive who wears a gray Stetson and uses common language, occasionally sprinkled with salt. He thinks Davis should be bold.

“Right now he’s as bland as that wall over there,” Freeman says, pointing to white plaster.

The DWP head believes state government should dive into the public power business. About 40 million Americans get their electricity from public power--including 1.4 million customers of the DWP--so it’s not exactly a radical concept. On average, according to the American Public Power Assn., consumer rates for public power are 11% lower than for electricity delivered by private utilities.

But that’s not a good enough reason for this state to launch a massive public power venture. The compelling reasons are reliability, fairness and control--to keep electricity generated by California plants in California, and to shift the power producers’ motive from unlimited profits to public service.

While municipal electricity rates in California have remained stable--because public utilities are exempt from deregulation--private utility charges in San Diego have nearly tripled. Now customers of financially strapped Southern Cal Edison and PG&E; are bracing for rate hikes.

Meanwhile, profits for electricity wholesalers have leaped, some up to 600%. And rolling statewide blackouts are threatened almost daily.

Says U.S. Sen. Dianne Feinstein: “The cat’s out of the bag. We have kind of a robber-baron mentality going on now. It’s whatever [the producers] can get, they get. There’s not much loyalty to California.”

No, the loyalty’s to shareholders. They own the companies. Want loyalty to Californians? Then Californians have to be the owners.

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The profit-takers insist the problem is supply and demand--not their greed. Fine, then Californians on their own could increase the supply and greatly reduce the market price for this indispensable commodity.

Freeman believes California could follow the New York route--the FDR route. This state, he says, could build some simple power plants. It could buy and expand Edison and PG&E; transmission lines, thus rescuing the failing utilities financially while assuring reliability and reduced rates. Revenue bonds could provide the cash.

“We’ve got a state-owned water project,” he notes. “We’ve got a state-owned highway system.”

We’ve also already got a state public power system. The state water project is California’s largest power consumer and generates most of its own electricity.

Senate leader John Burton (D-San Francisco)--an old-fashioned liberal--believes the state water department could be expanded into a public power authority. “Everything’s got to be looked at,” he asserts.

Roosevelt also told an interviewer, “There is nothing I love as much as a good fight.”

Davis is in a fight now, whether he wants to be or not. The public he’s supposed to defend is being mugged by “robber barons.” It needs bold counterpunches.