How Big Is Davis’ Task? One Expert Finds No Rival

This is the biggest test Gray Davis has faced as governor, you say? Think again. This is the biggest test faced by any California governor, ever.

Look back:

World War II and the Great Depression were national crises beyond any governor’s control.

The colossal budget deficit Pete Wilson faced in 1991 was resolved with courage. Jerry Brown acted swiftly to bail out crippled local governments after voters passed Proposition 13 in 1978. But in each case, the crisis was handled inside the state Capitol, among politicians.

Fixing this electricity debacle will require not only gubernatorial leadership, but the cooperation of players scattered far and wide who wield their own power. They include federal officials, utility execs, private financiers and power generators. Many are out-of-staters whose only interest in California is the money they can suck out.

“You have to go back to the San Francisco fire and earthquake of 1906 to come up with a comparable threat of catastrophic collapse,” says state Librarian Kevin Starr, a noted historian.

That natural disaster destroyed most of San Francisco, then the center of California commerce and culture. But the city--led by civic-minded businessmen--essentially rebuilt itself with federal help.

“Gov. Davis faces the challenge of confronting possible catastrophic collapse of the state’s basic physical system,” Starr says. “And that’s the greatest challenge any governor has faced in 150 years.

“I can’t think of anything comparable because it’s pervasive. It affects every sector of society. It’s about our fundamental viability.”

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Davis’ outward demeanor these days often resembles the proverbial deer in headlights. He is less animated, even more soft-spoken in public than usual. Most likely, however, this is a sign of both apprehension and anger.

The words have been tough. The governor denounced “price-gouging” and “out-of-state profiteers” in his State of the State address Jan. 8. That got people’s attention and prodded them to the bargaining table. Since then, Davis has softened his tone in hopes of enticing the producer “profiteers” into long-term deals for reliable, affordable electricity.

But beyond the long-term contracts, Davis is said to have concluded that some sort of state public power authority must be created to protect consumers from ever again being victimized by the gougers. He looks to his native state and the New York Power Authority--created by then-Gov. Franklin D. Roosevelt--as a model.

State government, he believes, should own some block--10% maybe--of California power generation. One insider observes: “That’s the difference between keeping the lights on with a reliable, affordable supply and allowing the [power] generators to game the system and rob us blind.”

Currently, the state water department is acting as a temporary public power agency by purchasing wholesale electricity on the expensive daily market for the nearly bankrupt private utilities. The governor and Legislature have set aside $400 million in surplus tax money, good for only a few days. They’re counting on the long-term deals to extricate California from its present fix.

Davis is dead set against a consumer rate hike beyond the temporary boost--9% for residences, up to 15% for businesses--the Public Utilities Commission recently granted Edison and PG&E.; No legislative leader is advocating one either.

The pressure for still higher rates is coming from the financiers, utilities and generators who have their hands in the ratepayers’ pockets.

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Long term, the answer clearly is more energy supply. There’s a myth that California has not been building power plants. Nine have been approved in the last two years, five are under construction and three are expected to be operating by summer.

A permanent public power authority, as envisioned by Davis, could go into partnership with private utilities to build plants. It could partner with municipal utilities to generate more electricity. It could buy into out-of-state plants.

Davis also can play this card: In a “state of emergency,” the law says, “the governor is authorized to commandeer or utilize any private property or personnel deemed by him necessary in carrying out [his] responsibilities.” The state must pay “reasonable value.”

That means seizing private power plants. Davis considers it a possibility. Union workers, based on inquiries, would be willing to keep operating the plants.

That may be too bold for this cautious governor. But maybe not when he’s facing the biggest challenge ever: staving off California’s catastrophic collapse.