See How You Like This Action, Mr. President

And so the president of the United States made his way to California this week and offered some advice. What Californians need to do, President Bush said, is quit whining about the energy mess and take action: “Energy,” he said, “is a problem that requires action, not politics, not excuses, but action.”

Issuing $12.5 billion in bonds, pushing a dozen or so new power plants through the pipeline, launching a World War II-style conservation campaign--apparently these don’t qualify as action. And asking federal so-called regulators to step forward and bring some order to a deregulated wholesale market run amok--well, apparently, that would fall under the heading of “excuses.”

And excuses won’t do. No, sir. Action is the answer. Now just what action the president believes Californians should take he did not make clear. At this point, however, there seems to be about only one course left untried--seizing power plants. Now there’s action.

It’s fun just to imagine the potential theatrics. National Guard troops swarming the gates, while plant operators, screaming strange Texas curses, frantically shred the maintenance records. And, look, there goes Gray Davis himself, shinnying up a smokestack to unfurl the bear flag, shouting “Eureka! We have seized it!”

Alas, however glorious such imagery, this is not how it would work. The most persistent proponent of plant seizure option has been state Treasurer Phil Angelides, and in an interview he described an almost bland procedure: a paper battle that ultimately would engage, as he put it, “fleets of lawyers and accountants.”

Before he delved into specifics, Angelides, a Democrat and former land developer, paused to make the historical case for taking public action to rein in runaway private markets and protect common interests. He spoke of Teddy Roosevelt and the trustbusters, of the federal response to the Great Depression, of the long history of regulated power utilities, and also of zoning laws and the not uncommon instances of eminent-domain property seizures for roadways and schools.

“The notion of a society and economy protecting itself through public action against a private market gone awry,” Angelides said, “or through the acquisition of private property in the public interest, is not a novel one, a radical one, or one that is inconsistent with the successful American economy of the 20th century--when prudently used.”

In fact, he said, “it’s as American as apple pie.”

So then, how would a seizure work?

Angelides picked up a government code book and read aloud the section that empowers the governor “in a state of emergency to commandeer or utilize any private property or personnel deemed by him necessary in carrying out the responsibilities hereby vested in him as chief executive of the state, and the state shall pay a reasonable value thereof.”

He explained that the governor would issue an order to give the state temporary title to either a plant or the power it produced. The plant would keep operating as usual. Once the energy crisis had passed, ownership would be returned to the private company and there would be negotiations or court contests to determine the “reasonable value” of what the state had taken. The question of reasonable value, of course, is where the accountants come in, attempting to prove that their prices were reasonable.

“It might be worth seizing the contracts of one power plant,” Angelides said, “just to see how they could justify these prices. They couldn’t.”

What plants do we seize?

Angelides made reference to the 23 California plants purchased by outside companies, most of them Texas-based, after the state’s deregulation plan was hatched. The utilities sold these plants--constituting about a third of the state’s generating capacity--for a total of about $3.2 billion. At the time, it was thought that PG&E; and Edison had snookered the Texans. Hah.

The treasurer said his staff, using figures favorable to the generators’ case, has calculated that the reasonable price of power from these plants ought to be running at about $110 to $150 an hour. Instead, they are commanding prices double or triple that amount. Said Angelides: “They are making profits unseen any time in our history, a classic example of a private market run amok.”

OK, then, when do we saddle up?

It is the governor’s call, but in Angelides’ view seizures should be made only if current “obscene prices” jump even higher this summer to a level of “horrifically obscene prices.” At present, he said, through a combination of bonds, rate increases and aggressive conservation, the state can stagger through the crisis and into a more orderly energy future.

If wholesale prices shoot any higher, though, the plan will collapse, leaving California with few options. Rates cannot be raised again without jeopardizing the economy. The bond card has been played to the hilt. And there are limits to how much demand can be curbed by conservation. What’s left? Plant seizures, of course. Action.