Dan Walters: Crisis deepens: politicos panic

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Dan Walters: Crisis deepens: politicos panic


(Published March 23, 2001)

That choking sound you hear is California's political class shifting into near-panic mode as it realizes that the energy crisis is on the verge of becoming a full-scale meltdown, with utilities forced into bankruptcy and consumers hammered by severe and prolonged power blackouts and soaring electricity bills.

The Legislature, which had been content to allow Gov. Gray Davis to handle the crisis on his own, suddenly came to life Thursday, jolted by this week's unexpected rolling blackouts and threats by creditors to force the utilities into bankruptcy court. Lawmakers quickly fashioned a basketful of legislation aimed -- or so they hope -- at increasing power supplies, promoting conservation and relieving the financial pressure on utilities and electricity generators.

But it may be too little, too late -- and Davis and other politicians are already pointing fingers of blame, aware that a political price will be paid if the apocalypse strikes.

While Davis chants his mantra that he inherited a fatally flawed utility deregulation scheme from predecessor Pete Wilson, Republicans are blaming Davis for moving too slowly after the crisis first surfaced last summer, and even some of Davis' fellow Democrats are distancing themselves from the governor.

"Deregulation was a product of a Republican governor, a Republican author and a Republican PUC (Public Utilities Commission) that was unduly impatient," Davis said at one point this week as the Capitol buzzed with private negotiations and public posturing.

A day later, however, state Controller Kathleen Connell, a Democrat, issued a warning that Davis' power purchases, running at $50 million a day, had already drawn down state budget reserves by nearly two-thirds, and she refused to authorize additional transfers. It was a direct shot by Connell at Davis, an old rival, and came just a day after the governor had endorsed a Connell foe, Antonio Villaraigosa, in the duel for mayor of Los Angeles.

Other Democrats didn't join Connell's direct challenge to Davis, but there is, nevertheless, a growing concern among Democratic legislators that the power purchases are costing many billions of dollars more than the governor had projected and could place the state budget in jeopardy. They're nervous because Davis has refused to reveal, even to legislators, exactly how much power the state is buying each day and how much it is paying.

From the few details that have been disclosed, it's clear that the state is spending about $1.5 billion a month, which would wipe out the state's reserves by midsummer. It's also becoming increasingly clear that Davis probably can't make good on his promise to avoid major consumer rate increases, unless the state is willing to plunge deeply and semi-permanently into debt to underwrite wholesale costs, or unless federal authorities order huge refunds from power suppliers.

Rates in areas served by private utilities have risen only slightly while the costs, first to utilities and later to the state, soared. Data from the administration and utilities, when collated, indicate that the state is in line to collect just 20 cents for every dollar it's spending on power purchases, and the gap will increase as summer heat drives up demand.

Privately, some economists say that private utility rates will have to rise 33 percent to 50 percent to cover costs of current power supplies, plus utilities' past debts to generators and the state's purchase of the utilities' transmission system, if that deal is made final.

"It's ultimately going to break down, and the ratepayer is going to pay for it one way or the other," Republican Sen. Jim Battin said during one of Thursday's many committee hearings on utility legislation. No one disagreed with him.

DAN WALTERS' column appears daily, except Saturday. Mail: P.O. Box 15779, Sacramento, CA 95852; phone (916) 321-1195; fax: (781) 846-8350 E-mail: dwalters@sacbee.com Recent columns: http://www.capitolalert.com/voices/index_walters.html

-- Swissrose (cellier3@mindspring.com), March 23, 2001


Davis can point all the fingers he wants, it's the leader in office who will get the axe for not solving the problem. We're up sh*t's creek here in CA, it's going to be a long hot summer that's for sure.

-- CAkidd (CAkidd_94520@yahoo.com), March 23, 2001.

It will be a payer who pays.
It now looks like both the tax and rate will be the payer and there's not a prayer that will get them out of it.

-- (perry@ofuzzy1.com), March 23, 2001.

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