Davis Reveals Costs of Handling Energy Crisis

Gov. Gray Davis on Friday released details of contracts totaling more than $51 million for the consultants, lawyers and experts his administration has hired to work on the energy crisis, which is bleeding state coffers at a rate higher than previously estimated.

A confidential report released to lawmakers this week showed the state buying electricity at a rate of $58.6 million a day from Feb. 15 through last Sunday, the most recent dates for which the Department of Water Resources made figures available. Officials had earlier estimated state general fund expenditures at about $45 million a day.

Since Jan. 17, when the water agency started buying electricity for customers of the near-bankrupt Southern California Edison and Pacific Gas & Electric Co., the state has spent nearly $3 billion.

Concerned about the unchecked flow of money, state Sen. Steve Peace (D-El Cajon) sent a terse letter to the Davis administration Friday vowing to block approval of more general fund spending on power. Peace, chairman of the Senate Budget Committee, said he was taking the action “in the absence of any discernible program by the California Public Utilities Commission to provide for the recovery of these funds.”

The administration has sent five requests to Peace since January, each time asking to spend $500 million more in general taxpayer money. Although the senator approved those requests, he made it clear that he will approve no more until the PUC ensures that the general fund, which pays for everything from parks to schools, will be reimbursed.

To reduce the hemorrhaging of state money, Davis has hired teams of negotiators to forge cheaper, long-term contracts with generators; lawyers to pin down the details; and advertising agencies to sell conservation programs to the public.

Several of the highest-profile negotiators retained by Davis, including former Edison executive Michael R. Peevey and Los Angeles Department of Water and Power General Manager S. David Freeman, have offered their services pro bono.

But others, the contracts released by Davis reveal, come at a premium. Northern California law firm Wilson, Sonsini, Goodrich & Rosati is billing the state at an hourly rate of $210 to $550. The firm has been hired to review a lawsuit between the utilities and the PUC and make recommendations for a possible settlement.

The Davis administration justifies the $51 million in spending by saying that top talent is needed to battle the impressive teams of negotiators retained by the utilities and private generators.

“We are engaged in the most profound economic challenge California has faced in modern times,” Davis said Friday. “We need the best, most experienced talent we can find.”

The largest contract is a $40-million agreement with Grey Worldwide, an advertising agency that is producing a campaign on ways to save energy. Television and radio spots are already airing.

Another contract, for $6.2 million, was awarded to Vikram Budhraja and his Pasadena firm, Electric Power Group Inc., to conduct negotiations with electricity suppliers for long-term contracts.

The Davis administration is paying $25,000 plus expenses to former U.S. Sen. Bennett Johnston (D-La.) to help lobby the White House, Congress and federal energy regulators.

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Times staff writer Dan Morain contributed to this story.