Will Davis Err on the Side of Caution?

In the throes of an energy crisis, many Californians are worrying about rolling blackouts and power rationing during the holidays. The state’s governor, however, must face his own threat: “Grayout.”

The state’s energy crunch has handed Gov. Gray Davis his first major managerial--and political--headache. A September survey by the Public Policy Institute of California showed the governor’s job approval at 66%, but only 28% of its respondents approved of the way Davis was handling utility-deregulation issues. In the institute’s October survey, Davis’ job rating dipped to 60%.

In assessing the governor’s response to the state’s electricity crisis, some things about Davis need to remembered. He’s not a risk-taker. He doesn’t want anything unpleasant to rattle voters while he’s in office--like new taxes, power-rate spikes or energy shortages. He’s up for reelection in less than two years, not to mention the buzz surrounding him as a possible Democratic candidate for president in 2004.

Thus, given California’s Democratic bias, for Davis and legislative Democrats, the state’s electricity emergency is the proverbial skunk in the Rose Garden.

Now, energy woes didn’t bring down Democrats last November. In San Diego, ground zero for anger over electricity-rate increases, state Sen. Dede Alpert (D-Coronado), who voted for the 1996 legislation that deregulated California’s investor-owned utilities, beat back a challenge from Republican Larry Stirling. Also, Assemblywoman Susan A. Davis (D-San Diego) defeated Rep. Brian P. Bilbray, despite Bilbray’s attempts to clobber her for supporting deregulation. (Bilbray had some vulnerability, too, having signed a congressional letter supporting the state deregulation bill.

But the assemblywoman managed a pirouette not unlike former Gov. Jerry Brown’s turn-on-a-dime support for Proposition 13 in 1978. Last summer, she co-authored a bill, signed by the governor, to roll back rates for two years while a new energy system is devised. You can do that when your party controls both houses of the Legislature and the governor’s office. All Republican Bilbray could do was to blast utilities at a San Diego hearing.

As the 2002 elections draw closer, don’t think Sacramento Democrats aren’t taking note of the congresswoman-elect’s winning strategy. The governor has called for a special legislative session next month, whose major focus will likely be pounding the power industry. Neither the governor nor the state’s Democratic legislative leadership have ruled out some sort of re-regulation.

However, it will be Republicans who will soon control the federal government. Will the new Bush administration be as responsive to appeals for assistance from the governor as President Bill Clinton has been?

Clinton’s energy secretary, Bill Richardson, temporarily rescued California from the specter of statewide rolling blackouts when he ordered power suppliers in the West to ship excess electricity to the state. State Senate President Pro Tem John Burton and U.S. Sen. Barbara Boxer have asked Atty. Gen. Janet Reno to investigate “potential collusion and any other unlawful acts” by power producers. “They can start it,” observed Burton, “and let the Bush administration stop it.”

President-elect George W. Bush has expressed concern over rising energy prices nationwide; but he may not feel obliged to rush to aid a governor already being touted as a possible Democratic challenger in 2004. Nor might he feel compelled to bail out a state that went solidly for Vice President Al Gore in the 2000 election.

However, there are other considerations. If Bush doesn’t help California, he risks hanging a key California supporter out to dry. State Senate Minority Leader Jim Brulte (R-Rancho Cucamonga), along with state Sen. Steve Peace (D-El Cajon), was an architect of the 1996 deregulation law; it would be difficult to crop Brulte out of the now-famous photo of former Republican Gov. Pete Wilson proudly signing the bill that helped trigger the current problems.

Retiring state Sen. Cathie Wright (R-Simi Valley) told The Times, “I’m getting a kick out of watching . . . Brulte and . . . Peace try to pussyfoot around it. In our caucus, deregulation was ‘it.’ ” However, with state Republicans out of step with the state on several other issues, their continuing support for energy deregulation could make it more difficult for the GOP to gain ground in 2002.

Reports indicate that California’s energy crisis may be spreading across the West. That heightens the need for Republicans in Washington to deal with the issue. Constituents’ anger over skyrocketing utility rates could put congressional seats at risk in two years, and dog Bush in 2004.

With Democrat Clinton gone from office, Davis could turn a federal cold shoulder into a political opportunity. Early on, he’s aimed his hottest rhetoric at the Federal Energy Regulatory Commission. Davis lambasted commission members, all presidential appointees, as “armchair Washington bureaucrats” because of their reluctance to cap wholesale energy prices and provide consumer refunds. Now he’s added power producers, among Bush’s staunchest supporters, to his villains’ list. Soon he’ll be able to thrash the entire Bush administration, and the GOP-led Congress, for California’s energy problems, in much the same way Wilson, running for reelection in 1994, successfully lambasted Clinton and congressional Democrats on immigration reform.

There is also the threat of a proposed 2002 ballot initiative, authored by consumer activist Harvey Rosenfield and his Foundation for Taxpayer and Consumer Rights, that would restore utility regulation and authorize a state takeover of private power operations.

Proposition 9, the foundation’s previous attempt to take on California’s deregulated market, was defeated in 1998. But that was then. Yes, there will be another wildly expensive campaign waged against any re-regulation proposition, but that wouldn’t guarantee defeat. Think back to the campaign to pass Proposition 103, the auto insurance reform of 1988. Although outspent by opponents about 10 to 1, the initiative prevailed because Californians rebelled against high rates, and the insurance industry waged a fragmented and inept opposition campaign.

Whether an energy re-regulation initiative makes it to the ballot, let alone succeeds, depends on how Davis’ attempts at solving the problem play out, how winter and summer weather go, and if the initiative qualifies, how the campaigns resonate with voters.

Davis has been characteristically cautious in his approach to the possible initiative. Re-regulation could put him squarely between the rock of angry consumers and the hard place of state utilities and powerful business interests. While Davis is publicly seeking relief for consumers, he’s also being besieged by utilities, manufacturers, energy suppliers and others. He’ll have to work hard not to risk alienating either voters or campaign supporters.

“The intensity of the voters on an issue tends to overcome all other factors,” says Burton. “It’s political survival. Lawmakers raise money to help themselves survive. But if one’s constituents are so up in arms on an issue, it may overcome all contributions. That is a more serious matter of survival.”

Translation: Fix the energy problem to voters’ satisfaction or risk losing. If you can’t appease voters, face the problem early enough to dissipate their anger well before election time. That’s what Davisswift move toward rate hikes is about.

In today’s term-limited political environment, both legislators and governors, regardless of party, tend to go for short-term fixes. They look to solve policy crises with voter- (and contributor-) friendly solutions that offer near-instant political gain (rate caps and regulation) and delay the economic pain (the inevitable consumer pay-up) till they’re ousted by term limits and/or seek another office.

That strategy might help the governor and legislators through the next political campaign, but it would do little to spare Californians from the long-term consequences of short-term--and shortsighted--reform. *