DAN WALTERS: A year later, we know it wasn't merely a game of golf

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Opinions: DAN WALTERS: A year later, we know it wasn't merely a game of golf Copyright 2001 Nando Media Copyright 2001 Scripps McClatchy Western Service

Scripps-McClatchy Western Service

SACRAMENTO, Calif. - California will mark - but certainly not celebrate - an anniversary this week. It was exactly one year ago that a late spring heat wave swept over San Diego, and as air conditioners began drawing heavy amounts of power, San Diego Gas and Electric Co. began charging its customers high, market-oriented rates for juice.

It was the beginning of the California energy crisis, or at least of public and political awareness that something was wrong. And a year later, every aspect of the crisis continues to grow worse. We are paying 10 times as much for power as we were two years ago. We have amassed more than $20 billion in private and public debt that will grow even with sharp increases in consumer rates. And we face life-threatening summer blackouts.

Certainly the roots of the crisis extend much further than one year. They go back to decisions in the 1970s to stop major power plant construction and rely on conservation and alternative generating sources. And they include a momentous decision in the mid-1990s to adopt a "deregulation" scheme that was an unworkable hybrid of open markets and price controls that left us at the mercy of out-of-state generators. Of more currency is what was and wasn't done in the last 12 months to fan that spark into an uncontrolled, and perhaps uncontrollable, firestorm.

Gov. Gray Davis once said that he was approaching energy just as he plays golf, "one hole at a time." Unfortunately for Davis, and for the state, it was not a golf game, but one of three-dimensional, and perhaps four-dimensional, chess. To manage the crisis effectively, the governor needed the ability, either personally or through trusted aides, to pull together its disparate elements into a cohesive whole.

The golfing approach was evident from the beginning, as Davis dealt with only the most immediate aspects of the situation as they evolved, rather than embracing it wholly and actively. Private and public energy experts warned that what was happening in San Diego was a harbinger of a larger crisis and proposed that the 1996 "deregulation" be suspended, that rates be raised slightly, and that private utilities be given broad authority to enter into long-term supply contracts to stabilize the market. But Davis and his handpicked Public Utilities Commission president, Loretta Lynch, stalled for time.

Less than a month after the crisis first surfaced, the PUC voted 3-2 to authorize long-term supply contracts at about 5 cents a kilowatt-hour - slightly higher than wholesale prices had been, but ridiculously cheap by contemporary standards. Publicly owned utilities saw the looming price escalation and quickly locked up long-term supplies, but Lynch denounced the commission action as "a wrong turn" that could lead to higher consumer bills, and within days it was scuttled in legislation signed by Davis.

Rather than face the issue comprehensively and proactively, Davis, Lynch and the Legislature opted for an expedient fix in San Diego, rolling back retail rates without addressing either supply or cost issues. Within weeks, private utilities were beginning to take on billions of dollars in debt as wholesale costs skyrocketed.

Last summer's failure to act was compounded by other errors of judgment. It's clear now, for example, that it was a mistake for the state to continue buying power at sky-high rates when the utilities had exhausted their credit. Having a new deep pocket simply encouraged the generators to charge whatever the market would bear.

A year after he could have nipped the crisis in the bud, but didn't, Davis is busily rewriting history and blaming others, principally Republicans, for the dilemma. But the governor cannot, or should not, escape the responsibility for approaching this very complex situation like a game of golf, or like some routine political dispute, and thus failing to apply the aggressive and sophisticated managerial touch that this crisis demanded from the onset.

Like Gen. George McClellan discovered at the Battle of Antietam during the Civil War, the unwillingness to take risk often leads to greater carnage.


-- Martin Thompson (mthom1927@aol.com), May 21, 2001

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