Most Californians Think Electricity Crunch Is Artificial

Faced with higher energy costs, many Californians believe the state is experiencing an artificial electricity shortage driven by greed, and a sizable majority favor re-regulating the power industry, according to a Los Angeles Times poll.

The energy crunch is still abstract to many, who have yet to receive higher monthly electricity bills. Even so, it has had a sharply negative effect on public attitudes, compounding Californians’ worries about the economy as they become notably less confident concerning the state’s overall direction.

Two-thirds of respondents consider a recession likely in the next year.

And--perhaps as a consequence--Californians are less approving than they were just a few months ago of the job performance of Gov. Gray Davis and the state Legislature. Davis received poor marks for his handling of the electricity squeeze, as did the state’s privately owned utilities and the California Public Utilities Commission.

The poll, conducted Thursday and Friday nights, comes as California is grappling with fallout from the landmark 1996 decision to deregulate the electricity industry and, separately, with the skyrocketing price of natural gas.

The surge in energy costs has seized people’s attention in a way few issues have in recent years. Four in five Californians say they have been following news of the state’s chaotic energy situation, with a third saying they are paying close attention.

Two in five Californians say the power crisis is the most important matter now facing the state. The last time that question was asked, in June 1999, the energy issue barely registered. Back then, 34% said education was the most important issue; today only 19% say education is uppermost in their minds.

In 1996, under Republican Gov. Pete Wilson, the Legislature voted to deregulate the electricity industry. At the time, California power prices were considerably higher than prices elsewhere in the country. Deregulation was supposed to foster competition and, with it, lower prices.

Instead, unexpectedly high demand for electricity, tight supplies and runaway costs at the wholesale level have pushed up some consumers’ bills and strained the finances of the state’s two biggest private utilities, Southern California Edison and Pacific Gas & Electric. Until the state granted them an emergency short-term rate hike last week, a rate freeze had prevented those two companies from passing their rising costs along to consumers.

Customers of municipally owned utilities in Los Angeles, Pasadena, Riverside, Sacramento and elsewhere have not been affected by deregulation or soaring electricity prices.

Still, a solid majority of Californians, 66%, now view deregulation as a mistake. That is a shift from October, before the crisis grew acute, when a bit more than half of Californians either supported deregulation or had no opinion. At that time, 47% disapproved.

Now, the state’s plunge into a free energy market is viewed with stark negativity: Californians favor re-regulation of the electricity industry 2 to 1.

Nearly three in five Californians consider the state’s power crunch a very serious problem, and nearly seven in 10 worry that blackouts will hit their neighborhoods.

“We just ended up with a raw deal,” said respondent Stephanie Farley, 42. Her most recent gas and electric bill was $604 for a three-bedroom home in National City, outside San Diego. Under deregulation, she has paid as much as $800 a month for power, considerably more than her old bill.

Farley’s utility company, San Diego Gas & Electric, is no longer subject to the rate freeze and last summer increased its rates dramatically as its wholesale costs rose.

“There was no consideration for what it was going to cost,” Farley said of the move to let electricity prices fluctuate with supply and demand. “Somebody messed up somewhere.”

Indeed, the poll found a deep vein of public skepticism about the causes of the electricity crisis. More than half said they do not believe there is a shortage. Asked to explain their doubts, many asserted that greed on the part of utility companies and electricity wholesalers, rather than a lack of available electricity, is responsible for exploding prices.

“How can we go so many years with no problems at all, then suddenly we run into an energy crisis?” asked Carl Fisher, 79, a retired postal worker in Camarillo. His answer: The privately owned energy wholesalers are “playing games . . . jacking up the prices, trying to benefit themselves.”

Max Hobbs, 59, of Glendale, agreed: “Some providers under deregulation have, it seems to me, set up a situation where they have tried to create an artificial shortage, and that’s a big part of the problem.”

Like a fallen power line, deregulation and the ensuing controversy have burned just about everyone--and every institution--they have touched.

Private utilities take the largest share of the blame, with a third of people surveyed holding them responsible for the current problem, rather than the wholesale energy suppliers that have profited from deregulation. The Legislature gets the next biggest share of blame, from 22% of those surveyed. It is followed by deregulation in principle, with 18% citing that as the core problem, and the PUC--charged with overseeing the state’s energy industry--which 12% believe is most responsible. Seven percent blame the electricity wholesalers.

The crisis has presented Democratic Gov. Davis with the most serious challenge since he took office two years ago. Although he repeatedly notes that he inherited the problem, Davis’ standing has slipped, just as he starts looking ahead to a reelection effort next year.

Although 51% of registered voters approve of the way the governor has handled his job, the number is lower than his 59% approval rating in October and off sharply from last February, when 67% of voters approved of his performance.

Asked specifically about his handling of the electricity crisis, Californians said they disapprove, by 39% to 29%. Only 33% said the governor has shown decisive leadership on the issue, while 41% said he has been indecisive.

“I just think he should have done more sooner, before it got to the situation it is now,” said Steve Presser, a 36-year-old Fresno city worker. “If there was something that was going to go wrong with deregulation, they should have had some contingency set up. . . . All of a sudden the consumers are stuck paying the bill.”

The Democratic-run Legislature has fallen even further in the public’s esteem. Last February, 54% of voters approved of the way state lawmakers were handling their job; today 43% approve.

But the greatest hostility was aimed at the five-member PUC. It was the commission that first launched deregulation in 1995, with the Legislature giving its stamp the following year. At that time, Republicans controlled the state Assembly and Democrats ran the state Senate.

By 3 to 1, Californians disapprove of the job being done by the PUC, which last week approved emergency rate hikes of 7% to 15% designed to help Southern California Edison and PG&E.;

Of those affected, more than half said the 90-day rate hike would pose a financial burden. “I’m not poverty-stricken or anything, but I do live on a fixed income and try and watch my bills,” said Helen Baloga, a retired health care administrator in West Hollywood. “It’s simply not fair to us as citizens.”

The energy upheaval has soured the overall mood of Californians and made them significantly more pessimistic about the state’s economic prospects.

A year ago, by 53% to 30%, a majority of Californians believed the state was on the right track. Today, only 45% say things are going the right way, with 40% saying things are on the wrong track--the worst showing in more than four years.

There is sharp divergence between the views of Northern and Southern Californians. By 49% to 34%, Southern Californians believe the state is heading in the right direction, while in Northern California the reverse is true, with 47% saying the state is headed in the wrong direction and 41% saying things are on the right track.

There are several possible explanations. In Northern California, pricey housing is considered a particular problem, and a greater percentage of residents is served by private utilities--thus facing the prospect of much higher energy costs. Also, a larger percentage of Northern Californians believes there is an actual, as opposed to artificial, shortage of electricity.

Overall, the number of California voters who feel the economy is doing well has slipped some, from 87% in October to 83% in the most recent survey. The decline in those who consider the economy doing “very well” fell even more dramatically, dropping 19 points in the last three months as the national economy slowed just when the state’s energy problems worsened.

Sixty-eight percent of Californians now consider a recession likely in the next year, with 21% considering it very likely.

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The Times Poll, under the supervision of Director Susan Pinkus, interviewed 575 Californians, with a margin of sampling error of plus or minus 4 percentage points.

Associate Times Poll Director Jill Darling Richardson contributed to this story.

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Power and the Economy

Do you personally believe there is an actual shortage of electricity in California, or not?

There is no shortage: 54%

There is a shortage: 36%

Don’t Know 10%

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Do you approve or disapprove of the Legislature’s decision in 1996 to deregulate the electricity industry in the state?

Disapprove: 66%

Approve: 23%

Don’t Know: 11%

*

How likely is it that California could face an economic recession sometime in the next year?

Somewhat likely: 47%

Not very likely: 24%

Very likely: 21%

Not likely at all: 7%

Don’t Know: 1%

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Note: Among California adults.

Source: L.A. Times Poll

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What Deregulation Did

Utilities sold their power plants to private companies. The new owners, as well as dozens of other electricity producers and brokers, now sell their electricity in a computer-based marketplace called the California Power Exchange. Some electricity is also purchased through the California Independent System Operator, whose primary function is to stabilize the flow of electricity.

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Sources: U.S. Energy Information Administration, California Power Exchange, California Independent System Operator, California Municipal Utilities Assn.

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No Good News

Most Californians believe that deregulation of the electricity industry has been a bed thing for consumers, and they favor re-regulation.

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In Business

Energy Solutions: California can look to other states for clues on how to manage energy deregulation, C1