Riordan Attacks State Energy Role

Wading into California’s energy mess, Richard Riordan said Wednesday the state should dramatically scale back its regulation of electricity supplies in favor of a more market-oriented approach.

Riordan also called for renegotiating $43 billion in controversial long-term energy contracts approved by Gov. Gray Davis’ administration. The contracts helped stave off a summer of blackouts but locked in prices well above today’s costs.

Speaking outside the state Resources Building on a blustery day, Riordan called the energy crunch “a prime example of mismanagement and waste” caused by “inaction and then overreaction” by Davis.

“Our children and our grandchildren will be the ones who have to pay for his mistakes,” Riordan said.

The charges brought an unusually harsh response from S. David Freeman, who headed the Los Angeles Department of Power and Water when Riordan was mayor. He now serves as Davis’ energy czar.

“Dick is really dealing with subject matters he’s unfamiliar with,” said Freeman. “He’ll say one thing today and another thing tomorrow.”

Riordan offered his energy proposals during a Capitol stop on the second day of a state tour launching his gubernatorial bid. At one point, Riordan broadened his criticisms of Davis to a blanket condemnation of Sacramento.

“State government has never been able to do anything well,” Riordan said. Even if he were governor, he said, it would still be a mistake to manage the state’s power grid from Sacramento.

“In the long run, we’re going to screw up,” Riordan said. “Maybe I’ll do well for a year or two, but in the long run state government’s going to screw up.”

Riordan said he would abolish the state’s 3-month-old public power authority, created by the Legislature to ensure a constant 15% energy surplus. Freeman heads the agency, which will finance the construction of power plants.

“The state should not be in the business of building new power plants,” Riordan said. “This should be left to private industry and to municipal power authorities.”

Riordan said he would eliminate the California Independent System Operator. The agency makes small purchases of electricity to balance the flow on the transmission lines that reach three-quarters of California.

Instead, Riordan said, California should help create a “regional transmission organization” linking the grid that serves Western states. For years, federal authorities have encouraged states to form such compacts to create greater efficiencies.

But the Davis administration has been wary of ceding control of the state’s power grid. The governor blames federal regulators for many of California’s problems, saying they failed to halt price gouging.

As for the long-term contracts, Riordan said he would seek to revise them with the help of “top experts in energy and finance and tough negotiators.”

“This is what I did in Los Angeles,” said Riordan, “which was paying almost three times market price for coal.”

Freeman tartly responded that it was he--not Riordan--who renegotiated the coal contracts. “Obviously the mayor, who has the attention span of a gnat, has completely forgotten all of that,” Freeman said.