Davis Missed Chance for Bipartisan Front on Crisis

There have been so many screw-ups by California government on energy, this one may not even make the top 10. But the story does symbolize last year’s dithering that critics--friend and foe--lay on Gov. Gray Davis.

It’s a coulda, shoulda tale about missed opportunity. About how former Republican Gov. Pete Wilson might well have sent a tough letter to federal regulators exhorting them to clamp down on out-of-state power profiteers--maybe even urged some form of price cap--if only Democrat Davis had asked.

Just picked up the phone and called.

It’s possible Davis did not even know of Wilson’s interest in helping him lobby the Federal Energy Regulatory Commission, a band of free-market zealots who were allowing power generators to gouge California. The information apparently did reach the governor’s stressed staff, but may have slipped through the proverbial cracks of chaos.

Or, it is possible that Davis decided he’d rather use Wilson as a target than as an ally.

Whatever, the governor missed a golden opportunity to present a bipartisan front to Washington and the FERC. There might have been less playing of the blame game in Sacramento. California might have been more united politically.

“That moment was so important,” says state Sen. Steve Peace (D-El Cajon), who tried to broker the deal. “If we could have gotten the two partisan leaders to speak in one voice, it would have been huge. We might have broken through [to FERC]. . . .

“If you look at where we are today [in Sacramento], which is total irrational partisanship, I think we would have prevented that. It could have been a calming influence.”

Recall the situation last fall: Davis was shouting at the FERC to enforce federal law that allows power companies to charge only “just and reasonable” wholesale prices. He also wanted regional price caps--government meddling that many Republicans, including the Bush administration, find repugnant.

The wholesale price of a megawatt-hour then was rising to an average $300--up 10 times what it had been earlier in the year.

Ultimately, California’s power grid operator--the Cal-ISO--estimated the gouging at $6.3 billion. The FERC, however, has found only $124 million in potential overcharges.

Enter Peace, often characterized as “the architect” of California’s flawed deregulation. In fact, there were many architects of this wreckage. Gov. Wilson was the main advocate of deregulation--he and his state Public Utilities Commission. Peace was chairman of the conference committee that wrote the final bill, which passed the Legislature unanimously.

Last fall, Peace became alarmed about FERC and believed Davis needed Republican help in battling the lax regulators. He contacted Wilson’s former chief of staff, George Dunn, and the two drafted a letter for the ex-governor to send FERC.

It went through several incarnations and contained euphemisms for temporary price caps: “regionwide price restraints” or “cost-based rates.”

California electricity costs were “unacceptable and unsustainable,” one late version read. Another said: “The most casual observer can see that electricity prices charged throughout the West . . . are not moderated by any sense of reasonableness or public responsibility.”

“We were close at one point,” Dunn says. “But close means what? Wilson wasn’t satisfied. . . .

“He was rightfully reluctant to step on Davis’ toes. Was this something the current governor wanted the former governor to do?”

Davis should call him.

Peace says he spoke several times with high-level Davis aides, mainly then-energy advisor John Stevens.

“Boy, if that happened,” Stevens says, “I must have been smoking something . . . I don’t recall it at all.”

Says Wilson: “My purpose was to be helpful--not to try to steer the ship . . . If he had called and said, ‘Hey, you know, I think we got a big problem and I’d like to have a little help. Would you be willing to do some things?’ I’d been perfectly willing to talk.”

Wilson says he does oppose price caps, but suspects there was market manipulation and gouging that should have been investigated. He would have urged FERC to “exercise vigilance.”

“But I gathered there was no interest [by Davis], so I said, OK, that’s fine.”

Not long after Wilson didn’t get the call, he started getting the blame by Davis staffers for the energy crisis. Wilson got angry and now is striking back. “I’m not going to turn the other cheek.”

Would he now be less willing to help Davis? “What do you think?” Wilson replied with a chuckle.

I think Davis should find out for himself. Pick up the phone and finally make that call.