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Governor Defends Electricity Policy

Politics: Davis rejects GOP rivals' calls to disband power agency, saying private sector can't be trusted. He also says foes have offered few specifics on deficit.


SACRAMENTO — Gov. Gray Davis defended his energy policy against criticism by GOP candidates Wednesday, and accused his rivals of displaying a lack of specifics about how they would handle California's $12.5-billion budget deficit.

Speaking to the Sacramento Press Club, Davis said he watched the last half of the Republican candidates' debate Tuesday night and called all three "light on specifics" about the deficit.

And noting that at least some of his prospective opponents called for abolishing the new California Public Power Authority, an agency he approved to ensure an adequate supply of energy, the Democratic governor said: "Our form of deregulation didn't work."

"All three Republican candidates seem to think the answer lies in more reliance on the private sector," Davis said, characterizing the positions of former Los Angeles Mayor Richard Riordan, California Secretary of State Bill Jones and businessman Bill Simon Jr.

"I say to them: In this business, you have to learn your lessons," Davis continued. "Reliance on the private sector got us into this mess. The private sector has a role to play. But we shouldn't bet the farm on it. We need the Public Power Authority to balance it."

Referring to the fallout of Houston energy giant Enron's bankruptcy filing, Davis said: "There is nothing for certain when it comes to energy deregulation. We are totally dependent on the whims of the private sector to supply energy. If they do not, the lights go out That is why I believe strongly that we need to be able to keep the lights on if the private sector does not step up to the plate."

Meanwhile, Jones called on Davis--and all politicians, including President Bush--to donate their Enron contributions to a fund to support Enron workers and shareholders who suffered financially from the company's collapse.

"Gov. Davis should immediately return, to the account I mentioned the $117,000 [since 1998] he received from Enron," Jones said. "I made a pledge and commitment not to accept money from energy companies during the power crisis. Gray Davis made a similar pledge, but, as is typical for Gray Davis, he broke it."

Davis did not directly answer a question about whether he would return $42,500 he has received from Enron since taking office in 1999. But he noted that he adopted a policy in 2000 of not accepting contributions from independent power producers, including Enron.

"I'm holding to that policy," Davis said.

The governor defended his energy policy, contending that his efforts to promote conservation, preside over construction of several new power plants and enter into long-term contracts to buy electricity from independent producers are paying off.

Davis said that the state stabilized its energy markets in 2001 and that California paid $26.7 billion for electricity last year, down from the $27 billion that utilities paid for power in 2000.

Record wholesale power costs in 2000 and early 2001 hobbled California's two largest private utilities and led to the bankruptcy filing of one of them, Pacific Gas & Electric. The state began buying electricity early last year, when power producers would not extend credit to PG&E and Southern California Edison.

"My imperative last year was to keep the lights on," Davis said. "We were able to do that at slightly less cost than the utilities paid for power in 2000."

On another issue, Davis said he intends to reach agreement within a week or two on one of the longest-running issues in Sacramento--whether to raise workers' compensation benefits for employees who are hurt on the job. Davis said his goal is to overhaul the system in a way that will lower employer costs while also boosting benefits.

At the urging of business organizations, Davis vetoed bills backed by organized labor for three years running that sought to raise workers' comp benefits. Proponents of such a raise were so angry last year that they threatened to place an initiative to increase benefits on the November ballot. In recent weeks, Davis' aides have been presiding over closed meetings in which union leaders and attorneys who represent injured workers are pressing for benefit increases.

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