Energy on Agenda, but Issue Is Blame

When California Gov. Gray Davis testifies at a high-profile Senate hearing today, the issue formally on the table will be the expanded electricity price controls that federal regulators approved this week. But the session’s political subtext will be the escalating struggle between Davis and national Republicans to determine where California voters look for solutions--and blame--for the state’s power woes.

In both California and Washington, Republican strategists believe Davis is trying to manufacture a succession of conflicts with the White House that will allow him to run in 2002 as much against President Bush as against whomever the state GOP nominates in the gubernatorial race. In return, Republicans are trying to shift the focus back toward Davis--most aggressively through a California-wide television advertising campaign organized by Scott Reed, a former executive director of the Republican National Committee.

“Our goal is to get the focus back to Sacramento, where it belongs,” Reed said.

Both sides see the same prize in this tug of war: the opportunity to determine where most Californians direct their anger during what could be a long, hot summer of power shortages.

“The situation is that the public’s minds are not made up on this issue--whether it is Sacramento or Washington who has acted too little, too late,” said Mark Baldassare, a pollster at the independent Public Policy Institute of California. “That gives both sides an opportunity to get their messages out. The stakes are fairly high in terms of how the public in California ends up assessing blame over the next few months.”

A Slight Uptick in Davis’ Popularity

Overall, Davis’ political situation appears to be stabilizing. After months of runaway power costs, the prices the state pays for wholesale electricity are falling and new plants will come online next month. And following a free fall in private polls, Davis has seen his numbers tick back up slightly. Similarly, a poll financed by independent power generators showed that in mid-June, for the first time in months, Californians were becoming slightly more confident that the crisis is easing.

Within the state Capitol, Davis is asserting himself, demanding that lawmakers hold hearings on his rescue plan for Southern California Edison. On Monday, he released details of a similar plan for San Diego Gas & Electric. Last week, he announced an agreement that is likely to increase generation by alternative energy producers, who account for about a fourth of the state’s supply.

“This guy is changing,” said state Sen. Steve Peace (D-El Cajon), who a few months back had been urging that Davis take a more aggressive stance on the crisis. “There is a difference in his demeanor and focus.”

Yet the energy crisis still looms as a vast cloud over a reelection campaign that once looked like a stroll on the beach.

The paradox for Davis is that the substantive victory for price-control advocates at the Federal Energy Regulatory Commission meeting this week may complicate his political goal of maintaining a heavy focus on Washington. Though Davis and some congressional Democrats portrayed FERC’s decision as insufficient, it appears to have lanced the pressure for federal legislation to impose the tighter price controls that Davis supports.

Sen. Dianne Feinstein (D-Calif.), a principal sponsor of that bill, on Tuesday announced she would shelve the measure for six months to give the new FERC plan time to work.

As a result, the political effect of the FERC ruling could be to shift the focus away from Washington back toward decisions in Sacramento, which is exactly what Republicans prefer. “Gray Davis is the dog that finally caught the car,” said Dan Schnur, a San Francisco-based GOP consultant. “Davis is going to keep screaming about price caps and refunds, but now Republicans can point to substantive action.”

Davis: ‘Much More They Should Do’

For months, Davis has criticized Bush for refusing to support electricity price controls and other measures that the governor says could ease California’s energy crunch. At almost every opportunity, Davis offers the same message: California is taking the steps it needs to, but Washington has failed to help enough. That was precisely Davis’ message Monday when FERC significantly expanded the limited price caps it had imposed previously.

While saying that FERC had “finally taken a step in the right direction,” Davis added: “There is much more they should do”--including providing refunds to California for alleged overcharges. The overall tone of Davis’ statement was much more skeptical about FERC’s action than the remarks from Feinstein, who described the decision as “a giant step forward.”

Aides say Davis plans to repeat that two-part message in his appearance today before the Senate Governmental Affairs Committee, chaired by Sen. Joseph I. Lieberman (D-Conn.). In his testimony, and in a round of scheduled television appearances, Davis will demand that FERC order refunds in the range of $5 billion to $6 billion to the state, aides said. Davis also will distribute to every member of Congress a 177-page book chronicling the state’s response to the crisis.

Inside the Bush White House, some officials see in Davis’ cool response to FERC’s decision more evidence that the governor is determined to use the White House as a foil in his reelection campaign. The prevailing view, one official said, is that, no matter what concessions the administration offers, Davis will immediately raise the bar and demand something else--the way he did by talking about rebates as soon as FERC offered tougher price controls.

“That is Davis’ M.O.,” said one official involved in the White House’s energy strategy. “He asks the administration to do something, the administration does it, and then he attacks the administration for not doing enough. . . . He needs someone to blame.”

Davis aides reject that characterization, arguing that the governor is merely representing the state’s interests against an administration that they maintain is favoring energy producers over consumers. But Davis advisors acknowledge that they have used focus groups to test campaign messages that pin the blame for the energy crunch primarily on Davis’ Republican predecessor, Pete Wilson, and a “Republican president who has failed to stop his rich friends in the energy industry” from gouging consumers, one aide said.

“You don’t have to tell people in focus groups more than once how this is connected,” the Davis aide said.

Gubernatorial Rivals Are Free of Blame

Baldassare, the independent pollster, notes it may be especially imperative for Davis to keep Bush’s energy decisions in the spotlight because none of his potential Republican opponents in 2002--California Secretary of State Bill Jones, former Los Angeles Mayor Richard Riordan or businessman William E. Simon Jr.--is easily tagged with complicity in the problem. “None of them were really involved in the decision-making over deregulation,” Baldassare said. “The only one else to blame, in a political sense, is Washington and the Bush administration.”

The new independent advertising campaign against Davis was inspired largely by the fear of that strategy succeeding--damaging the standing in California not only of Bush but also of other Republicans, particularly those in Congress. Reed, whose American Taxpayers Alliance is funding the ads, said he decided to launch the campaign after Davis appeared to gain the upper hand in the media debate following Bush’s visit to California late last month.

“The Bush trip really changed the terms of debate about Davis’ problem and made it more of a possible national Republican problem,” Reed said. “The entire terms of debate turned around and was focused on the issue of price caps as opposed to negligence on Davis’ behalf. Our group is attempting to go out and engage Davis.”

To “engage” Davis, Reed’s group, which has not revealed its donors, is spending what he said would be $1.5 million on an initial ad criticizing Davis this week, though a spot check of TV stations around the state indicated a far more modest buy. Reed said the group is planning to air a new ad as soon as this week.

Democrats plan to answer the ads with attacks of their own and will be filing complaints with the IRS and other federal agencies about the anonymous funding of the Reed ad.

Today’s Senate hearing will give Davis another chance to respond to the GOP and make his case for greater help from Washington. But Lieberman aides acknowledge the hearing is likely to be much less confrontational than it would have been if FERC had not acted Monday. The agency’s decision “changed the dynamic,” the aide said.

That assessment may apply not only to the conflict between FERC and its critics but also equally to the hostilities between Davis and the White House.

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Times staff writers Dan Morain in Sacramento and Mark Z. Barabak in Los Angeles contributed to this story.