California governor has new role: power guy

For the moment, California Gov. Gray Davis is no longer the nation's self-appointed "education governor."

He's now the power guy.

Under the steady gaze of political kingmakers nationally, Governor Davis has taken the full reins of the state's energy crisis, a problem he at first seemed eager to keep at arms' length.

It's not the turf the governor would have preferred.

Midway through his first term, sailing a successful centrist course, Davis expected and welcomed some post-Gore attention from restless Democrats, say political analysts. He's been building a track record on education, healthcare, and other less explosive issues.

But as the state teeters on the brink of power blackouts, the mild-mannered, cautious-to-a-fault governor has been thrust into a position fraught with political peril, and potential.

"This is a potential career killer or careermaker," says Bruce Cain, a political scientist at University of California, Berkeley. "He knows he's on the spot."

The crisis is expected to be protracted, with blackouts possible this winter and next summer.

Yet in its short life, the power shortage has already forced an evolution in Davis's strategy, say analysts. Many believe he shifted tactics this week, largely abandoning an approach that vacillated between grandstanding and back-room deal-cutting, both of which seemed initially to worsen his political standing.

"People started saying, 'Who's in charge here,' " says Tim Hodson, director of the Center for California Studies, in Sacramento. "He realized he had to take charge and look proactive, and largely he's achieved that."

In this week's "state of the state" address, Davis tried to walk a line of supporting the state's utilities and consumers, while promising to take over power generation in the state, if necessary.

Davis also visited Washington, seeking help from the Clinton administration in capping energy wholesale prices, which have risen 500 percent since the middle of last year. He expressed optimism after the conference Tuesday, and participants released a statement pledging all sides to work toward assuring "the long-term regularity of market conditions."

But Davis is far from out of the woods. Deregulation, launched in California in 1998, has satisfied almost no one. Electricity rates are set to rise about 10 percent in the state, but its major utilities complain they are still absorbing billions of dollars in energy costs that they cannot pass on to consumers. Wall Street has hammered the utilities, which themselves have raised the specter of bankruptcy.

Under deregulation, California utilities have sold off most of their power plants. Many are owned by firms outside California, and Davis has no control over the prices they charge. He has asked the Federal Energy Regulatory Commission to cap rates.

Exacerbating all this are strong population growth, high electricity demand, and virtually no new power plants in California built during the past four years.

To make matters worse, this has been an unusually dry winter in California and the Northwest, diminishing the availability of hydropower.

Like it or not, Davis has accepted the crisis as his to fix, despite the fact that he can credibly claim that he did not cause it.

This week, he proposed spending $1 billion to correct the energy shortfall, including a $250 million conservation program, asking California residents to cut energy use by 7 percent. He promised not to let utilities go bankrupt, threatening to seize control of power plants, if necessary, to prevent blackouts.

Prior to his address, Davis had seemed intent on distancing himself from the problem, while trying to work out back-room deals for price hikes with the utilities. He has paid high-profile visits to Federal Reserve Chairman Alan Greenspan and President Clinton in Washington, leaving many in California puzzled about what role they could play in a solution.

Davis's choice of issues to build his stature nationally has been education, a major challenge that suits his incremental style, say analysts. Power shortages, on the other hand, seem to require instant action, an uncommon style for Davis and one that could easily backfire, given the number of stakeholders involved.

No one foresees a quick fix. Bringing consumer prices closer to wholesale prices seems inevitable, though consumer advocacy groups are already protesting that the utilities should not be allowed to raise rates.

And political analysts note that Davis must be careful in attacking the concept of deregulation, for fear of undercutting his carefully built image as a pro-business, centrist Democrat.

This week, he called deregulation a failure, but did not call for a complete reimposition of government control over power generation and delivery.

Many analysts see the problem largely righting itself in the long term, though the short term has everyone worried.

Complicating the short-term scenario for Davis is that he's about to face a Republican administration in Washington, which has little incentive to make a potential 2004 rival look good.

But most analysts don't think all the answers lie in Washington, anyway. Perhaps the most telling comment in Davis's speech this week was his pronouncement that "the time has come to take control of our own energy destiny." Political analysts say those words indicate the extent to which Davis has positioned himself at the center of the crisis.

And while successfully managing the crisis may only marginally improve Davis's standing nationally, says Mr. Cain, fumbling it could stain him permanently.

(c) Copyright 2001. The Christian Science Publishing Society