Lobbyists for Consumers Are Underdogs in Electricity Battle

Doug Heller is aware of their presence: the lobbyists for Edison, Dynegy, Enron, Pacific Gas & Electric and other big-energy interests. There are dozens of them; he doesn’t even know how many. He passes them in hallways, sees them in hearing rooms, broods over their inscrutable faces.

“No matter where you are, what time, there are always six of them huddling,” he says with a trace of hyperbole. “I’m always worried, because they’re strategizing, and then you see them go off to find legislators.”

The lobbyists’ success--or lack of it--could have a direct bearing on how much money taxpayers will have to cough up in a restructured electrical power system that will probably replace California’s chaotic experiment with deregulation.

Heller, who is only 28 and a newcomer to Capitol politics, lobbies for the other side--for the lowly consumer. He strains to keep up although, in reality, there is no keeping up. In sheer numbers, the lobbyists for the big utilities and energy producers hold an advantage over Heller and the few other consumer advocates by a margin of perhaps 10 to 1.

PG&E; alone muscles in with at least nine in-house lobbyists and the services of six outside firms, including legal powerhouse O’Melveny & Myers, according to state filings.

“We’ve got a peashooter,” Heller laments, “and they’ve got the keys to the armory.”

In truth, the peashooter is bigger than it looks, supplemented by massive media coverage that tends to work in the underdog’s favor, along with the implicit threat of an anti-utility ballot initiative. One thing’s for sure: Never have the stakes--billions of dollars--been higher on a single issue.

Complexity of Crisis Not for the Novice

The fight has intensified for months as critical decisions draw near on a raft of key questions, including the possible state purchase of the utilities’ 32,000-mile power grid.

The crisis is stunningly complex, both in terms of market dynamics and abstruse technology, creating the sort of dark circumstance in which lobbyists and hired experts--the line often blurs--play an unusually important role in forming the legislative vision.

“In the 21 years I’ve been around the Capitol, I’ve never seen an issue of this magnitude and complexity,” said Susan McCabe, a Sacramento-based lobbyist for Reliant Energy of Houston. “If you squeeze the balloon over here, it’s going to pop out over there. And a lot of these [legislators] are new. That’s kind of scary.”

Providing essential information, with the right spin, is an art of the lobbyist accomplished by a variety of means. Lobbyists testify at hearings. They meet privately with lawmakers and staff. They draft legislation and amendments, sometimes competing to provide the key language that may become law.

They scramble to determine which bills have a chance--and look for ways to block them, revise them or jam them through. They identify swing votes and broker deals with other interest groups. They hold impromptu news conferences. They network with their allies to shape strategies on a chessboard that changes every moment.

Under the rules of a special legislative session devoted exclusively to energy issues, normal hearing notices are waived; any day, any moment, a significant new piece of legislation may surface for debate.

No fewer than 97 energy bills were backed up in the Legislature last month--a total that climbed last week to 158. Sixty-two were pending in the Senate, 96 in the Assembly.

The docket involved matters as weighty as building power plants, overhauling energy-efficiency standards for housing, and re-regulating markets that were deregulated five years ago.

“I’m getting stretched really thin, beyond the boundaries of my knowledge and ability,” said Lenny Goldberg, one of the handful of consumer lobbyists, who coordinates his defenses with Heller and six or eight other lobbyists, attorneys and nonprofit executives.

Goldberg, 55, a gray-haired, slightly rumpled Sacramento veteran, has worked 10 years for the most prominent of the nonprofit groups, the Utility Reform Network of San Francisco, which receives more than half its $1.9-million budget from a share of utility revenues under a 1984 legislative mandate.

More recently, he also began representing the San Diego-based Utility Consumers’ Action Network, which also receives a share of its $700,000 budget from the utilities.

Arriving at work one recent morning in an office building overlooking downtown Sacramento, Goldberg found 87 e-mails related to energy issues. He scanned them between phone calls.

“I’m looking at bunches of e-mails on bilateral contracts, whether the large industrial customers are in or out [of the deregulated markets], and under what terms,” he said. “To what extent are their costs being shifted to small consumers, and vice versa?

“There are a bunch of big issues . . . demand-reduction programs . . . transmission . . . a raft of efficiency bills that I haven’t even had a chance to look at. It never seems to stop.”

An hour later, Goldberg was stepping into a closed-door meeting with the staff of state Sen. John Burton (D-San Francisco), and soon afterward he was attending a Senate subcommittee hearing where Burton was floating his own proposal to buy the transmission grid.

Consumer groups were supporting the purchase with one caveat: that the state pay the lowest price possible to avoid an apparent bailout of the debt-saddled utilities.

In an aisle of the crowded hearing room, Goldberg conducted a whispered discussion with an official from Pacific Gas & Electric, and the two men agreed to meet privately later. It was an encouraging development, considering the recalcitrance of the massive utility about parting with its portion of the grid.

The Great Equalizer

Numbers aside, some insiders believe consumer lobbyists hold unprecedented clout because the crisis has drawn such intense media coverage and the Legislature is so eager to address the concerns of voters.

Any time a new proposal is raised, “you have 118 legislators saying, ‘What do the consumer groups think?’ ” said one Senate staff member, speaking on condition of anonymity. “That is the great equalizer.”

Consumer lobbyists “represent the people who vote,” said state Sen. Debra Bowen (D-Marina del Rey), chairwoman of the Senate committee on Energy, Utilities and Communications. “When my office gets phone calls, I hear a lot more from people who pay utility bills than from people concerned about their stock in Reliant or Duke.”

Consumer groups in California are less effective and less well-funded than in some other states, said Harry M. Snyder, senior advocate for the Western regional office of Consumers Union, publisher of the magazine Consumer Reports.

“They have a greater sense of social responsibility in other states, especially in states on the East Coast, particularly in New York and New England,” he said. “We don’t have that strong of a consumer protection agency in California. You don’t see the Department of Consumer Affairs suing anybody.”

Doug Heller lobbies for the nonprofit Foundation for Taxpayer and Consumer Rights of Santa Monica. His boss, Harvey Rosenfield, is a hard-line advocate who symbolizes the ever-present ballot-initiative threat, and thus must be taken into account in crafting legislative remedies.

Big energy, meanwhile, brandishes its own club: the danger of utilities filing for bankruptcy.

In this din of rhetoric, the advantage swings to those who can make their messages credible and persuasive. Often it happens behind closed doors, leaving lobbyists caught off-guard when a new proposal pops up bearing the enemy’s fingerprints.

Heller ran into Goldberg in a Capitol hallway. Heller had just obtained the draft of an Assembly bill dealing with load reduction, the rights of large industries to reap a financial benefit for cutting their demands. A source who had given him the draft considered the bill unfriendly.

“She says it was written by big energy,” Heller said.

Heller and Goldberg agreed to look into it. Nearby stood a cluster of men in suits from Deutsche Bank, which has voiced its own interest in buying the grid. Heller cited them as an example of a hard fact of life here: Rival interests are at work every instant, often in ways that are difficult to discern.

“In the Capitol, right now, there are two types of lobbyists,” Heller said, “the lobbyists you see . . . and the lobbyists you don’t.”

Wall Street bankers tend to fall into the latter category. Emissaries from Deutsche Bank, Credit Suisse First Boston and Goldman Sachs are among the financial and technical experts who have been meeting regularly, in private, with Gov. Gray Davis and the legislative leadership.

The money men are here to offer guidance but also, presumably, to see that events in California do not damage their clients’ stock prices or credit ratings, said Hedy Govenar, a Sacramento veteran who lobbies for Enron, a big energy conglomerate.

She herself has not been a part of those meetings, Govenar said, but every lobbyist is attuned to the potential importance of the secretive discussions.

“I’m not aware of this happening before,” Govenar said.

Consumer lobbyists worry that these largely invisible outsiders may unduly protect the utilities and energy companies at the expense of ratepayers.

Even a big-energy lobbyist such as Michael Monagan of Calpine, which builds and operates power plants, finds it hard to imagine that the specialists are strictly objective.

“As much as they’re trying to be productive [and help] the leadership,” Monagan said, “they’ve got biases.”

The Capitol’s Designated Experts

The fact that legislative leadership is playing such an active role in the special session has streamlined the work of the lobbyists. Perhaps 20 members of the two houses have become designated experts, and much attention is directed toward those key players and vital swing votes, said Govenar.

Heller recalled one Democrat from the Central Valley who, in need of a particular Republican’s support, reached outside the sphere of energy to call in the influence of a powerful constituent in the timber industry.

“You’ve got the liberal Democrats saying to the corporate lobbyists, ‘This Republican’s in play; go work on him,’ ” Heller said. “They all have their webs behind them of people that are powerful.”

Goldberg sat in his office on yet another morning working his own web. A meeting with the governor’s staff concerning the transmission grid had gone well.

He made calls to line up experts and exhibits for a briefing before the Assembly Democratic Caucus. He reminded Heller of a meeting with state finance officials.

Hanging up, Goldberg took a moment to consider the state of the war. Were the consumers winning?

“Frankly,” he said, “I’m not sure there are any winners here, given how messy and ugly it is. But I do think we’re going to have a lot to say about what the solution’s going to be. I don’t think they’re going to roll over us.”

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Times staff writer Nancy Vogel contributed to this story.

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