A Shift in Seasons for the Energy Crisis

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A Shift in Seasons for the Energy Crisis PETER H. KING

August 23 2001

SACRAMENTO -- Seasons change subtly in California. Outside the state Capitol the other day, there were faint suggestions in the August air that autumn was not far away--something in the way the shadows spilled across the grounds, something in the slant and texture of the late afternoon sunlight. Inside the building, signs pointed to a seasonal shift of a different sort.

Almost everybody, as always, was talking about energy. References to megawatt hours and peaker plants and runaway markets and all the rest rattled through hallways and hearing rooms, as they have for the last nine months or so. There was, however, a change in the tenor and focus.

Last winter, the onset of the crisis brought an almost breathless panic to the statehouse; California appeared to be in free fall and nobody seemed quite certain what to do. Everybody was shouting loudly and saying little. In time the shock passed and the talk turned angry, mean. California had entered a long season of accusations about who was culpable for creating the mess. In the spring, prophecies of doom began to dominate the dialogue. Summer was coming and with it the likelihood of even greater chaos. How to squeak through the summer, how to keep the lights on--this was the center of public discourse just two months ago.

And now the summer has come, and California has not been plunged into darkness, and the discussion here has turned yet again, this time toward the fundamental question of where things should go from here.

The Humpty Dumpty that was the world of California energy under the deregulation plan had a great fall and was shattered into pieces now scattered from here to Washington, from corporate boardrooms in Texas to federal Bankruptcy Court in San Francisco. Most likely, it will not be put back together again.

At the same time, it also will not be possible for California to pretend it was just one big nightmare and return to the good old days when electricity was provided by regulated utility monopolies--reliable, and as expensive, as a fine watch. Too much of that system was broken apart to make way for the bright future of free market energy. Plants were sold off, governmental responsibility for oversight shifted, and so forth.

And so now what?

The seasons of panic and anger and dread behind them, California political leaders and lobbyists and policy mavens at last have begun to take up the question, to start working through what California's energy model should look like in the future--the shape of the beast to come.

Will it be, say, public power and, if so, is there an electrical version of the DMV lurking up ahead? What about private power? Why not drive on deeper into the free market experience? Of course, if there are political consultants who can make that sale to ratepayers, given what California has gone through, well, Gary Condit should hire them.

More likely, a combination of some sort will emerge. A bit of this, a dash of that, all bound together with baling wire and the wit of S. David Freeman, the governor's energy guru and head of the newly formed California Power Authority. But what will be a workable mix? What will the state do? What role will the battered utilities play, presuming they still want to play one?

These are the sorts of questions now in play. The canvas is by no means an empty one. Long-term contracts, litigation and large, lingering debts created in the crisis cannot be erased or ignored, but rather must be made part of the mix, worked around.

In a second-floor hearing room Tuesday, for example, state Sen. Debra Bowen's energy committee was exploring the ramifications of the state brokering billions of dollars worth of electricity purchases for the strapped utilities.

"Who gets to see what goes into these contracts?" Bowen was pressing a lawyer for the state Department of Water Resources. "How do you imagine this will work?"

One floor below, Gov. Gray Davis was swearing in directors for the new power authority, to be known officially as the Consumer Power and Conservation Financing Authority. The governor described this body variously as a "firewall," a "balance wheel" and an "insurance policy." Yet when pressed, Davis said he could not be specific at this point about just what the authority's role would be in the California energy model to come.

"I see it," he said gamely, "as a limited but important role."

Perhaps what's most interesting about this new season in the California energy fiasco is that many Californians inevitably will find it not so interesting at all. The early, television-ready imagery of whole neighborhoods gone dark and cars careening through unlighted intersections has been replaced by that of lawmakers and lobbyists, of suits, sitting around tables in slightly under-cooled conference rooms, tossing around their jargon and acronyms, talking policy.

It's enough to make all but the most fervent wonks turn away, to send everybody off for a long winter's nap.

Of course, this is precisely what happened in the mid-1990s, when the wonderful folks who run this wonderful state decided that what California needed most was a good dose of electricity deregulation. And while everybody slept--yes, present company included--they did it. You know the rest. Night, night.

-- Martin Thompson (mthom1927@aol.com), August 23, 2001

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