Davis in the Dark on Rate Hike? Looks Like It

This is one of those tales, it does seem, where the truth is stranger than fiction.

Forget history. Ignore logic. Think implausible. Not plausible denial.

Call me naive, but I buy Gov. Gray Davis’ story that he didn’t know the president of the Public Utilities Commission was about to propose a record electricity rate increase until he read about it Monday morning in The Times.

History and logic say the governor’s lying:

* Davis appointed the PUC president, Loretta Lynch, a seasoned Democratic warrior.

* Early on, Davis told his administration appointees: “I’m not appointing you to exercise your independent judgment. I’m appointing you to implement my judgment.” Even judicial appointees, he said, should “reflect the views I’ve expressed in my election.”

* Davis is a notorious micro-manager who has trouble delegating. It’s why some insiders say he could never be president. He even has insisted on personally approving routine press releases issued by his office.

Since last summer, when California’s flawed electricity deregulation blew up into gouging and blackouts, Davis has taken the Populist position of opposing major rate hikes. In a comment now haunting him, the governor said Feb. 16: “Believe me, if I wanted to raise rates I could have solved this problem in 20 minutes.” Clearly, if that’s all it took, he should have gone for the rate hike.

Now comes his handpicked PUC president with a proposal to raise rates by up to 46%. The logical assumption--which has been practically everybody’s in Sacramento--is that Davis whispered to Lynch that he reluctantly had concluded a rate hike was necessary, but didn’t want his fingerprints on it. He gave the order, but was nowhere near the crime scene.

That’s the logic--and his behavioral history provides the circumstantial evidence--but where are the hard facts?

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Indeed, several sources close to Davis who are habitual political spinners, but aren’t liars to my knowledge, insist the governor feels he was blindsided. “He was incredulous,” says one. “He yelled at the staff, ‘Why . . . didn’t I know?’ ” says another. Adds a third: “We had to peel him off the ceiling.”

Consider these facts:

* Regardless of Davis’ rhetoric or desires, the PUC legally is an independent body. The governor appoints members to six-year terms and cannot fire them. He can change the president, but can’t kick her off the commission. He can cajole, but not control.

* Lynch has become the favorite target of state Republicans, accused of months-long procrastination in the energy debacle. The governor has been keeping his distance, not standing with her. She has become a lightning rod. Davis does not embrace lightning rods.

* Davis has suffered periods of indecisiveness on energy, especially last summer when he might have headed off this crisis. It doesn’t follow that suddenly he’d get bold and try to finesse a rate hike.

Conjecture: Lynch decided she’d had it. She was being vilified--her competence under attack, her reputation sinking. She was a lawyer, not a lackey. The PUC needed to regain credibility. She’d risk angering the governor by doing the right thing: Raise rates to pay for power.

Ask some people close to Davis and they’ll tell you Lynch is a renegade, sure. But she’s also a hero. Those rates needed to be raised--for the sake of the state treasury and the strapped utilities--regardless of whether the governor is ready.

*

Ah, so this was a staff plot--aides working covertly behind the governor to raise rates and offer him plausible deniability? In fact, that’s what the governor angrily suspected Monday.

Aides flatly denied it.

Some top aides did meet with Assembly leaders last Friday, but not to float a possible rate hike, as is commonly believed. They asked that a Davis energy bill being considered that day be delayed because it contained a $10-billion cap on revenue bonds for power purchases. A numbers cruncher said the bond cap, under a worst-case scenario, could force a rate hike next fall of maybe 80%.

That’s how talk of Davis support for a rate increase got started.

Meanwhile, Lynch was developing her proposal to present at a PUC meeting Tuesday. Word leaked out from the PUC staff and got on the Dow Jones news wire Sunday. A Davis advisor didn’t get details from Lynch until that night and opted to wait until morning to inform the governor.

The governor could have tried to head off the rate hike Monday, but decided against it. Maybe Lynch was right. Anyway, he still had 30 days before the rate was final. Jump now and he could look silly.

This was not a sneaky governor pulling a fast one. It was cautious Davis moving slow.