Davis Keeps His Distance From Utility Rate Hikes

Gov. Gray Davis, convinced that he can’t win votes by delivering bad news, avoided the task of telling Californians what virtually all experts have been saying for months--that electricity bills are going up.

Indeed, on Tuesday, the Democratic governor quickly moved to distance himself from a rate hike of as much as 46% that was approved by the California Public Utilities Commission, led by his appointee Loretta Lynch.

That and other recent moves have thrown Davis’ credibility into question--even in his own Democratic Party.

“If you’re the governor,” said political consultant Darry Sragow, “you don’t want to take the blame for a massive rate increase that is not going to sit well with a lot of voters. You want to be in a position where you can say, ‘I didn’t have a choice; my back was against the wall.’ ”

Davis describes his view of the situation as “optimistic.” He has called it an “energy challenge,” not a crisis, even as the state’s two largest utilities border on bankruptcy, and the state experienced blackouts a week ago, in mid-March, when electricity use was 50% less than it will be in the summer, when demand is highest.

Davis and his aides say the governor is fully engaged in the problem, understands its many dimensions and is working long hours to solve it. But the crisis wears on, and an increasing number of lawmakers, including fellow Democrats, are alarmed.

“It’s an energy crisis, not an energy challenge,” said Senate Energy Committee Chairwoman Debra Bowen (D-Marina del Rey), who began warning of a coming energy shortage 13 months ago.

“This is a major crisis,” Sen. Don Perata (D-Alameda) said, “and it would appear he is overwhelmed by it.”

“If you don’t face reality,” said Sen. John Vasconcellos (D-Santa Clara), “you can’t possibly improve it. His posture has been baffling. I lament what is going on. This is my beloved state, and we’re in serious peril, and it scares me.”

Many academics, utility executives, Wall Street analysts and legislators concluded weeks and months ago that rate hikes were necessary, given the soaring wholesale price of electricity. Even Davis has acknowledged that a rate hike might solve the situation.

“Believe me,” Davis said Feb. 16, “if I wanted to raise rates, I could have solved this problem in 20 minutes.”

But in a reaction that added to lawmakers’ bewilderment, Davis said in a statement Tuesday that the PUC action was “premature because we do not have all the appropriate finance numbers necessary to make a decision.”

“Until we do,” the statement continued, “I cannot support any rate increase.”

In taking steps to raise rates, Lynch may well end up taking substantial flak for her governor.

“Recent polls show the PUC is very unpopular in this state,” Sragow said. “Gray Davis is still popular. Voters clearly don’t see a connection between the governor and the PUC.”

Davis’ aides say the governor didn’t talk to Lynch before she acted. Lynch, a frequent visitor to the Capitol, was in Sacramento late last week and again Tuesday. She may not have spoken to Davis, but she did make other top administration officials aware of her plans.

Lynch could have decided to act on her own. The state Constitution gives the commission authority to raise utility rates. But the governor is well known as a micro-manager, involved in the most minute details of state governance. Davis repeatedly has said he expects all his appointees to “think like I think,” and not to act on their own.

As recently as last week, Davis directed that the PUC take specific actions to help ensure that alternative energy producers get paid.

Davis has said the Legislature’s job is to implement his vision. He has said judges he appoints who later break from him on major issues should resign. His appointees “should not be free agents.”

So he strained his credibility by saying he was unaware that Lynch would move to raise rates Tuesday, particularly given events that occurred late last week.

On Friday, Davis Finance Director Tim Gage and Susan Kennedy, one of his top aides, met with Assembly leaders behind closed doors. At the meeting, a participant warned that rates might have to rise 50% to 100%.

Also Friday, a top aide to Davis told The Times that Davis’ staff was convinced that a rate hike was necessary, even as Davis continued to publicly oppose it. On Sunday, a top Davis aide referred reporters to Lynch, who confirmed that she would move to raise rates Tuesday.

Two months ago, Harry Snyder of Consumers Union was defending Davis. Now, Snyder, who has worked with Davis on various issues for decades, is, like many others, raising questions about the governor’s credibility, his penchant for secrecy and his competence.

“Something is wrong,” Snyder said. “Either he is over his depth, or it is hubris, or it is the great river in Egypt, ‘Denial.’ ”

Here are some of the governor’s statements and actions, since called into question:

* Davis held a news conference Feb. 23 to say he had reached an agreement on a rescue plan with Southern California Edison that included a deal to buy its massive transmission system for $2.76 billion. A final package, he said, would be announced within a week, not only with Edison but with San Diego Gas and Electric.

A month later, a top utility executive described the talks as “dreadfully slow.” Negotiations over a similar deal with Pacific Gas & Electric, which he said back in February would be completed by now, are even further behind.

* Davis has refused to release details about contracts he signed with independent generators to buy power. He said, however, that the contracts accounted for 6,000 to 7,000 megawatts of electricity this summer, a significant amount that would help protect the state from having to buy much of its power on the far more costly spot market.

Last week, when he released some scant details in a report on the contracts, experts who read it concluded that California would be forced to buy half or more of its electricity on the expensive spot market.

* Davis brushed aside reporters’ questions last week about the blackouts that rolled across the state. He remained cloistered as the outages continued for a second day, emerging only after they ended to announce a plan to ensure that alternative energy producers would be paid. A week after he called on lawmakers to quickly approve a bill that would help get them paid, the legislation remains stalled.

“It is inept at all levels and doesn’t encourage any confidence that he can handle it,” Snyder said. “Moreover, it doesn’t encourage us that he is going to tell the truth.”

The energy crisis is perilous for Davis’ reelection effort next year. But the governor’s strategy of being unremittingly optimistic and going to great lengths to maintain his opposition to rate hikes, could be to his benefit when he faces voters.

“Ethically,” said UC Berkeley political scientist Bruce Cain, “not being forthcoming is worse. Politically, the more he can obfuscate, the more likely it is some people will buy the obfuscation. . . . The reason we see obfuscation is that obfuscation works.”

Not all politicians follow that maxim.

Davis’ predecessor, Republican Gov. Pete Wilson, held a news conference in 1991, as California plunged into a recession, to announce that he was pushing for what became the largest tax increase in state history, calling it necessary to help erase a $14-billion deficit. Top advisors had urged him to leave the delivery of such bad news to others.

“Any time you deliver bad news to voters you’re taking a risk,” said Dan Schnur, who was Wilson’s spokesman. “But it is a much bigger risk to allow a situation to fester, without preparing voters for decisions that have to be made.

“Nobody likes pain,” Schnur said. “But they are much more willing to tolerate it if they understand why it is necessary.”