Gov. Davis Feisty About Gaining Leverage Over the 'Cowboys'

The phone rang and it was the governor. "Just wanted to talk a little bit about electricity," he said. "I think we're on the verge of breaking the exorbitant spot market. . . .

"Believe me, we're still in for a volatile summer. But our plans are beginning to fall into place, and we finally have some leverage. The only thing these greedy out-of-state generators respond to is leverage. . . .

"The point is, we're turning the corner."

Gov. Gray Davis was feeling good--about plunging wholesale electricity prices (lowest since April 2000), about conservation (Californians used 11% fewer kilowatts last month than in May 2000), about more supply (one major Kern County power plant is about to go online two months early) and about new poll numbers.

Davis believes his "summit" with President Bush two weeks ago in L.A. burnished his image. His pollster, Paul Maslin, found that the governor's job approval rating rose from 46% in early April to 52% after the Bush meeting. The president's job rating in California, meanwhile, fell from 56% to 43%.

Bush handed Davis a microphone to shout his message: that he's building plants and conserving electricity--but only federal regulators can order price relief, and they've refused. That word finally got through to people, the governor thinks.

And this was why Davis had phoned--to stress that he does have a plan, an endgame, and it's working. Critics to the contrary.

"It's premature to declare victory. It's not the time to pop champagne corks," he said. "But we're turning the corner."

Davis must have said "turning the corner" and attributed it to "leverage" 20 times in our 30-minute conversation. And the anti-generator rhetoric rolled naturally off his tongue, having by now become integral to his everyday speech.

"The name of this game is leverage," he said. "If you don't have leverage over these cowboys, they will steal you blind. They'll take every dime you have, all the clothes you own, and be laughing all the way to the bank."

These cowboys, of course, are mostly Texans. Critics have protested that a governor cannot keep calling people names and still expect to do business with them.

"That's the only thing that gets their attention," Davis asserted. "They're embarrassed as sin. The last thing they want is any attention. They're lucky they're not in jail. I mean, this is highway robbery. . . . They've been selling us back our own electrons at 800% more than we paid for them two years ago at a time we're conserving. . . ."

A confluence of events has provided the leverage, Davis said:

* His administration has locked up 43% of the state's electricity needs with long-term deals at reasonable prices, reducing dependence on the sky-high spot market.

* California has become the nation's No. 1 electricity conserver.

* The U.S. Senate has turned Democrat and is pressuring federal regulators.

* Bush has named two new members to the Federal Energy Regulatory Commission who, unlike the chairman, don't seem like power company toadies. Indeed, the FERC is probing predatory price gouging by El Paso natural gas.

"And then you have a governor who's quick to get in the face of greedy out-of-state generators," Davis continued. "Shame them for being the highly irresponsible citizens they are. . . . Naming names and holding people accountable. Exposing their willingness to bleed California dry. . . . Taking no prisoners."

A governor also threatening to tax windfall profits and seize power plants.

Davis recently went after municipal utilities, as well, after learning they occasionally had been gouging the state even worse than the private profiteers. The governor warned he'd seize their excess power unless they agreed to sell it at a small profit, maybe 15%.

He was especially irked at the L.A. DWP, and told both Mayor Richard Riordan and Mayor-elect James K. Hahn.

"They didn't like it," Davis recalled. "They said it sounds like a threat. I said it is a threat. You've made a fortune off us. You should be embarrassed to be taking advantage of the state during its time of need. We certainly came to your aid after the 1994 earthquake."

I reminded Davis that critics fault him for not acting more quickly a year ago. They complain he should have pressed for long-term contracts then and pushed for consumer rate hikes to salvage private utilities. Does he acknowledge he could have moved faster?

"No, I don't concede one iota," he replied. "That's just all armchair quarterbacking. I mean, I've taken on the biggest challenge this state has faced in 50 years. We're turning the corner. . . ."

Could be. But this summer will be a tricky corner to turn. Davis still could be run down by rolling blackouts and Texas cowboys.

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