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California and the West

Governor Renews Criticism of Regulators

Power: Davis implies that federal commission is too ideological. Its approval is needed if California is to purchase the electricity-transmission grid.

February 28, 2001|DAN MORAIN and NANCY VOGEL | TIMES STAFF WRITERS

WASHINGTON — Gov. Gray Davis, trying to win support for California's plan to buy a huge stretch of the state's electrical transmission system, took a swipe Tuesday at the federal commission that must bless such a deal.

Davis noted that President Bush has an opportunity to fill two vacancies on the five-member Federal Energy Regulatory Commission and will determine its chairman.

"It is my hope," Davis said, "that whoever the president chooses is a practical businessman or woman who lives in the real world and understands that when you inherit a mess, your job is to fix it, right the ship and move forward--as opposed to being a rigid adherent to ideology."

Earlier this year, Bush appointed Curt Hebert Jr., a strong free-market proponent who has served on the commission since 1999, as chairman. But he can change that appointment.

Hebert, a 38-year-old attorney and former Mississippi lawmaker, has said Davis' plan to have California buy 32,000 miles of high-tension power lines from the state's ailing utilities would amount to "nationalization" and might not be in the public interest.

The commission has been a strong advocate of electricity deregulation and, in addition to the dispute over purchase of the power grid, Davis has criticized its members for refusing to impose limits on soaring wholesale power prices, which bled California utilities of billions of dollars in the last nine months.

"We have practical problems we have to solve," he said, citing the billions of dollars the utilities owe power generators and banks. "My hope is that [Bush] places people on the FERC who understand real-world considerations."

Hebert could not be reached for comment Tuesday. The commission's two other members, William L. Massey and Linda K. Breathitt, Democrats appointed by former President Bill Clinton, were also unavailable. There are two vacancies on the panel.

Davis spoke after conferring for 30 minutes with U.S. Energy Secretary Spencer Abraham about the state's proposal to help the financially ailing utilities by purchasing the power grid. He presented Abraham with a nine-page memo detailing the plan and said the energy secretary would probably give him his views on the plan by the end of the week.

Last week, the governor struck a tentative deal with Southern California Edison to buy its portion of the grid for $2.76 billion, more than twice the book value. He is working on similar deals with Pacific Gas & Electric and San Diego Gas & Electric. Utilities could use money from the sale to restructure their multibillion-dollar debt.

Although Abraham has no direct authority over the energy commission, he presumably holds influence with Bush, and Davis came away from their conversation buoyed.

"If he would endorse the plan," Davis said, "that would be a leg up in getting FERC's approval. . . . I hope by the end of the week he will be able to endorse the proposal or at least endorse a modified proposal that is satisfactory to us.

"Believe me," Davis said, "I've been in enough meetings to know when someone is trying to be helpful and when someone is not. [Abraham] is trying to be helpful. He wants this problem solved, and . . . I believe he will support our proposal to get Southern California Edison back into the energy business."

Under federal law, the energy commission would have to approve California's purchase of the steel towers and aluminum wires of its three biggest private utilities. The commission could scuttle the purchase if it determined that state ownership would harm the public interest--a legal standard that gives the agency much discretion.

Walter Ferguson, Hebert's chief of staff, said Tuesday that Davis' plan would get close scrutiny.

"Sure, we have to be open-minded, but I'm skeptical as to how this helps," he said. "How does this solve the supply issue? How does this impact the region? Those two questions have got to be answered, because you don't want to make the problem worse."

California's proposal runs counter to the commission's 2-year-old push to have transmission grids operate on a wide regional scale without heed to political boundaries. In some parts of the Midwest and South, private companies have proposed operating transmission systems for profit--a trend endorsed by Hebert.

"I assume Hebert is going to be unenthusiastic, probably very unenthusiastic [about California's proposal]," said Richard Pierce, a George Washington University law professor who has observed the commission for decades.

"Nobody at FERC is going to be real happy about a state trying to take away from FERC jurisdiction over a large portion of a transmission grid," he said. "I can't imagine any commissioner will like that. So what we're talking about is the intensity of their dislike and whether it will be so great they'll say, 'No, we won't approve it.' "

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