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California and the West | CAPITOL JOURNAL

Plenty of Failure to Go Around

April 09, 2001|GEORGE SKELTON

SACRAMENTO — It's doubtful any California governor ever has had such a slap in the face.

Certainly not in the last 60 years. Probably never. Not by anybody but the voters, at least.

The man goes on statewide television to project leadership and instill confidence. The next morning, one of the state's corporate giants files for federal bankruptcy protection.

"A lot of words," PG&E Chairman Robert D. Glynn Jr. said of Gov. Gray Davis' long-awaited TV address. "We have not seen a lot of action."

Of course, Glynn is playing his own finger-pointing politics, trying to shift any personal blame for leading this 149-year-old institution into bankruptcy. PG&E, after all, did push for the idiotic "deregulation" scheme that brought it down. In 1997, Glynn hailed California's deregulation as "a huge opportunity for consumers to lower their energy costs."

The most disingenuous, self-denying finger-pointers are the Sacramento politicians who passed, signed and delivered this debacle and now blame the Federal Energy Regulatory Commission for soiling their creation. They accuse FERC of ignoring federal law that requires it to make sure wholesale electricity prices are "just" and "reasonable."

It's true: FERC has allowed out-of-state power profiteers to loot California and mug its private utilities. But it was the Sacramento pols--prodded by campaign-contributing manufacturers and utilities--who unwittingly handed FERC control over the price of power generated at California's gas-fired plants. They weren't thinking then but are whining now.

And we've got a once-proud company that serves 13 million Californians--nearly 40% of the population--going belly up.


"Not since the bankruptcy of the Bank of California in 1875 has there been a comparable corporate failure," says Kevin Starr, state librarian and historian. "With a lineage that goes back to the 1850s, PG&E is more than a company. It is a social institution significantly responsible for the creation of contemporary California north of Fresno."

The San Francisco-based Bank of California collapsed because of bad loans, plummeting mining stocks and a sour national economy. Its failure set off a panic and plunged San Francisco into a depression for the rest of the decade.

"This thing is scary," Starr says.

In January, Starr called the energy crisis "the greatest challenge any governor has faced in 150 years . . . because it's pervasive. It affects every sector of society."

Moreover, it can't be resolved totally within the state Capitol. Energy producers, utility execs, private financiers, FERC and now a bankruptcy judge also wield power.

So far, there has not only been a corporate failure--but also a gubernatorial failure. It's not just because Davis set dual goals of avoiding a consumer rate hike and utility bankruptcy and failed in both. It's also because the governor has failed to earn the confidence of the legislators and interests he needs to help him meet the challenge.

He's increasingly seen as slow, timid and indecisive--and someone incapable of developing the personal relationships necessary for difficult coalition-building.

"We need a wartime governor right now," says one influential Democratic lawmaker. "A wartime governor seizes command and gives people confidence in where he's going."


Davis has come to a fork in the road. And to quote the great Yogi Berra, "When you come to a fork in the road, take it."

One fork could lead to conciliation/appeasement--maybe tripling electricity rates or borrowing tens of billions on the credit card. The other fork could lead to confrontation/leadership.

Mild-mannered Assemblyman Fred Keeley (D-Boulder Creek), chairman of the Energy Committee, has a bold idea: If FERC won't cap exorbitant wholesale prices, the governor should consider using his emergency power to seize contracts between electricity generators and marketers. He'd have to pay "reasonable value," but it would be substantially less than the wholesale prices being inflicted on California by greedy marketers.

This governor has immense power if he'll use it.

So far, the public has not quit on Davis. But faith in him is waning. Recent private polls have found only 23% to 36% of people saying they'd vote today to reelect him.

Government's main job is to protect the public, not only from muggers on the corner, but also in the corporate suites. Californians have been slapped around--and by Texas bullies, no less. Now, they see their governor being slapped by PG&E.

If they get disgusted enough, California voters might just slap Davis themselves.

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