Prospects Dark for Deregulation Architect

As a politician who has made a career out of rushing in where others fear to tread, state Sen. Steve Peace (D-Chula Vista) took the lead in shaping the state’s effort to deregulate the electricity industry.

Now the plan is a fiasco, and Peace’s political future is in doubt.

Among veteran Peace-watchers in San Diego, there are two schools of thought about whether he can survive to run again another day. One camp says no way, no how.

“He’s toast,” said political consultant and lobbyist John Dadian.

“He couldn’t be elected dogcatcher,” said consultant Ann Shanahan-Walsh.

Another camp says maybe he can survive but he will need some luck and some fancy footwork.

“Steve Peace’s obituary has been written many times and it’s never come to pass,” said consultant Bob Glaser.

Indeed, predictions of doom for other politicians who favored deregulation have proved wrong.

Conventional political wisdom held that skyrocketing electricity rates in San Diego County would hurt the reelection of state Sen. Dede Alpert (D-Coronado) and the congressional campaign of Assemblywoman Susan Davis (D-San Diego). In November, Alpert won reelection easily and Davis unseated Rep. Brian Bilbray (R-San Diego).

But Alpert and Davis were only bit players in deregulation, compared to Peace, considered the father of the 1996 bill, someone that his colleagues looked to for expertise about the complexities of the energy business.

While many legislators are satisfied with tending the local vineyards with legislation aimed specifically at their districts, Peace has tackled a range of complex and sweeping issues such as water allocation, workers’ compensation, the budgetary process and the Legislature’s system of self-governance.

Even as the deregulation situation was deteriorating last summer, Peace was busy on a master plan for using San Diego County as a laboratory for his views on regional government.

“Peace has always been known for being brainy and coming up with legislation that few people really understand,” said Jim Richardson, a former Sacramento Bee reporter and author of a biography of Willie Brown. “The energy mess is a testament to Steve Peace and his love of complexity.”

From Peace’s perspective, the utility mess hit at a particularly bad time: just as he was planning to leave his comfy district in the suburbs south of San Diego and run statewide in 2002 for secretary of state.

The normally talkative Peace is not talking about how the energy mess will affect his political career once he finishes his second, and last, term in the Senate.

But former Assemblywoman Denise Ducheny (D-San Diego), a Peace ally and would-be successor to the state Senate seat, says the onetime wunderkind--elected to the Assembly in 1982 at age 29--is beginning to think of life after politics.

“A lot of what he’s feeling is: ‘Hey, I’ve been here 17 years and done all sorts of things and the only thing people will remember is that deregulation blew up,’ ” said Ducheny. “I think he’s been reevaluating his future since summer. Part of him is saying, ‘Why do I need this headache?’ ”

Unlike many politicians, Peace will not need to rent out as a lobbyist to corporate clients to influence his former legislative colleagues.

He owns 29% of a firm he founded, one of the region’s most flourishing video production firms, Four Square Productions, best known for the cult film “Attack of the Killer Tomatoes” and its sequels “Killer Tomatoes Strike Back” and “Killer Tomatoes Eat France.”

A graduate of UC San Diego, Peace was a staffer for two Democratic legislators--Wadie Deddeh and Larry Kapiloff--before being elected to the Assembly in 1982. He was part of the “Gang of Five” that tried unsuccessfully to wrest control away from then-Speaker Brown.

After reaching a rapprochement with Brown, he was elected to an open seat in the Senate in a special election in 1993 and was reelected easily in 1998.

Blocked by term limits from running for a third term in the Senate, Peace has been considering a run for secretary of state in 2002 where the Republican incumbent, Bill Jones, is also termed-out.

One of the ironies of deregulation is that the first consumers to feel the pain of a deregulated market were Peace’s constituents, as SDG & E quickly divested its generating capability.

Although there are no polls on the issue, discussion about how badly the energy controversy has hurt Peace politically has become a major topic in local political circles.

Dadian, whose clients have included former San Diego Mayor Susan Golding, and Shanahan-Walsh, involved in numerous school issues, note that running for a statewide office from San Diego is a long shot even under the best conditions.

Only two San Diego-area politicians have been successful: Bert Betts, who was state treasurer from 1959 to 1967, and Pete Wilson. And even Wilson lost his first statewide race.

Among those who have failed at a statewide bid from San Diego is Lynn Schenk, who lost an effort to get the Democratic nomination for attorney general and is now chief of staff for Gov. Gray Davis.

“When you’re from San Diego, nobody knows you in the rest of the state,” Dadian said. “And when the first thing they would hear about you--from the press or an opponent--is that you’re the guy who brought the state higher electricity rates, that’s a very tough mountain to climb.”

Peace toyed with a run last year for mayor of San Diego but opted against it. Among other reasons, he would have had to move into the city. His political base has always been in the suburbs of east and south San Diego County.

In Sacramento, Peace has been antagonistic toward big water--becoming one of the major critics of the Metropolitan Water District of Southern California--but friendly to big energy.

Utility companies have contributed to his campaigns--$170,000 in 1998--and paid for dinners and golf outings. Sempra Energy, corporate parent to San Diego Gas & Electric Co., hired Four Square to make a video about their corporate strategy for the future.

In the early 1990s, when Southern California Edison attempted a takeover of SDG & E, Peace publicly opposed the move but then criticized a bill that would have blocked the takeover.

The takeover was bitterly fought by most San Diego officials, some of whom charged that Peace was covertly trying to help Edison. The takeover was rejected by the Public Utilities Commission as bad for consumers.

With age--Peace is 47--has come a certain degree of mellowness, but his early years in office were noted by verbal clashes with fellow legislators. Witnesses recall him referring to a senior senator as a “senile old pedophile.”

Walter Baber, a political science professor at the University of San Diego, said voters generally do not blame a specific officeholder when a piece of legislation goes haywire.

But given Peace’s close identification with deregulation, Baber noted, he could become “the one to test that observation.”

On the other hand, passage was overwhelming, a point that may be to Peace’s benefit if he makes the 2002 run and energy remains an issue.

“Everybody fell into the soup together,” said San Diego political strategist Larry Remer. “When you look at Steve’s possible opponents, there’s hardly anybody who hasn’t been touched by this thing.”