Complexity of Energy Problem Was Too Much for Legislators

Confused about what’s happening with electricity? You’re not alone. Most legislators have been confused for months. Actually, years.

Truth is, the Legislature, ideally, should never have been mucking around in the nitty-gritty of the electricity mess.

“We’re not equipped to do that,” notes Assemblyman Roderick Wright (D-Los Angeles), chairman of the Assembly Utilities Committee. “That’s not our core competency. We should have been making overall policy and getting out.”

Says a longtime lobbyist: “Legislators are institutionally, congenitally, totally incapable of handling details of something as complicated as electrical energy. It’s like if they were to get involved in individual procurements.”

It’s basic civics: The legislative branch sets policy. The executive branch administers it. On some big, complex matters--electricity--the chief executive appoints an independent regulatory body of experts. Like the state Public Utilities Commission.

With electricity, it all started going haywire five years ago and everybody’s to blame: manufacturers and utilities for pushing an unworkable deregulatory scheme. Consumer activists for sitting mute. News organizations for initially ignoring the “dull” subject. Republican and Democratic politicians for naively bearing the beast. The PUC for poor nurturing. The Federal Energy Regulatory Commission for refusing to control producer-predators. Gov. Gray Davis, last year, for reacting slowly.

Skip the finger-pointing and get to the fundamentals: Regulation of most electricity production for private utilities was shifted from the state to the pro-profiteer feds. But regulation of customer rates stayed with the PUC. Wholesale electricity prices soared last year because of natural gas spikes and generator gouging. But the PUC wouldn’t allow utilities to collect enough money from customers to cover their exorbitant costs.

Bingo: Bankruptcy threats, blackouts and Capitol bewilderment.

PG&E; did declare bankruptcy, accusing Davis of inaction. Last month, the utility proposed a refinancing plan that would pay off creditors and split off its nuclear and hydro plants from state regulation. “A regulatory jailbreak,” asserts Assemblyman Fred Keeley (D-Boulder Creek), a lead lawmaker on energy. “A disaster for consumers.”

It’s now up to a federal bankruptcy judge.

The Legislature and governor tried for months to rescue Edison from bankruptcy--or bail out the utility, depending on your view. They couldn’t agree on a plan, spooked by voters suspicious of utilities and the entire industry.

Crippling politics--one reason the Legislature should not be tinkering with the intricacies of “dedicated rate components.”

“Legislators are supposed to be responsive to voters and that’s fine,” says political consultant Darry Sragow. “But there’s also a time and place when decisions should be made by experts--by people on the other side of the wall from the influences of public opinion. That’s why we have judges. Justice is supposed to be blind. Legislators are supposed not to be blind.”

So the experts--the PUC and Edison--secretly negotiated a rescue plan, which quickly was approved Friday by a federal judge.

Both the Edison and PG&E; maneuvering are examples of another reason the Legislature could not craft a rescue plan. The issue was so broad and byzantine that it was out of the Capitol’s control. If a utility or a creditor did not like how it was faring in the Capitol, it could turn to the PUC or a federal court. It could branch-hop.

And that’s what both utilities did.

Make no mistake: Both rescue plans being debated in the Capitol would have been a better deal for residential and small business customers than the PUC-Edison pact. The politicians would have exempted these small-fry ratepayers from liability for Edison’s past debts. The PUC put them all on the hook with big business.

If the PUC had raised rates a year ago, California could have avoided the energy crisis. But Davis pressed the PUC not to raise rates, and President Loretta Lynch didn’t break with him until March. Davis and Democrats objected to raising rates to feed gougers.

“We should have just played it straight and paid the money,” says Wright. “We’re going to pay a huge fee for trying to be cute. . . .

“What happened was the PUC kept punting it back to the Legislature. The PUC was reluctant to take a stand.”

The Legislature stepped in where it didn’t fit and tried to fill a power vacuum. It had no choice and did some good things--like creating an $850-million conservation program and a public power agency.

But the politicians were out of their element trying to do elaborate rescues. That shouldn’t be their job.