Dan Walters: Davis plays in a virtual world while the energy reality continues

(Published July 11, 2001)
California still has a very real and very severe energy crisis, to wit:
The state is still running up massive debts as it pays more for power than it
can recover from ratepayers and is having trouble borrowing billions of
dollars to cover the debt.
There is a strong possibility, perhaps a probability, that when summer's heat
truly descends, there will be severe power blackouts as air conditioners
demand more juice than California can generate or buy.
One major utility, Pacific Gas and Electric, has filed for bankruptcy
protection and a second, Southern California Edison, is on the brink of
joining it.
There is, however, a virtual energy crisis consisting of political spin,
media leaks and made-for-television buzz words -- and it is rapidly becoming
dominant, while the real situation fades into the background.
This week's comic opera proceedings before a Federal Energy Regulatory
Commission administrative judge in Washington had little to do with reality
and everything to do with the virtual version.
Gov. Gray Davis and other officials demanded $8.9 billion in refunds from the
generators and brokers who have been selling California power for the past
year, alleging that California is, in Davis' words, "being gouged and ripped
off." But the number itself was more or less plucked out of thin air -- an
arithmetic exercise by the state power grid's traffic controller not intended
for a refund proceeding. And while Judge Curtis Wagner saw it as unrealistic,
Davis and other state officials insisted on its validity.
"There are refunds due that total hundreds of millions of dollars and maybe a
billion dollars," Wagner said as a final negotiating session collapsed. But
that's a far cry from the $8.9 billion that Davis insists is due. "If you
think California is going to settle for $1 billion in refunds, we will see
you in court," Davis said Tuesday.
Why is Davis being so belligerent? Because it's good politics. Ever since he
began berating out-of-state generators and accusing them of ripping off
California, Davis' approval ratings have been climbing. If he settled for
substantially less -- the power generators probably would agree to a couple
of billion dollars to rid themselves of the matter -- Davis would be
embarrassed. Politically, he's served by continuing to portray himself as
fighting for California and against the out-of-state generators.
That it's more political construct than reality is indicated by another event
this week, Davis' release of state power purchase data from early in the year
-- numbers that were made public only because a judge told him he had to do
it.
Davis and his minions have been accusing Texas-based generators and power
brokers of particularly egregious price gouging -- clearly playing on
Californians' instinctive mistrust of anything Texan and implying that Texan
George W. Bush is a co-conspirator. But the power purchase records -- which
were released only to journalists willing to pay a stiff fee -- indicate that
less than 10 percent of California's power purchase dollars were going to
Texas and the private sellers, in general, charged the state less than such
publicly owned utilities as the Los Angeles Department of Water and Power.
The clearly adverse position being taken by FERC and the purchase data that
undercut his jingoistic sloganeering are not, however, deterring Davis from
continuing to operate, at least for public consumption, in the melodramatic
virtual world.
One cannot, however, ignore reality forever. The likelihood of a
pro-generator decision from FERC means that there will be no easy out for
Davis, or for his pending deal to prevent Southern California Edison from
slipping into bankruptcy court. The Legislature has refused to act on the
Edison rescue plan while it awaited an indication of whether the utility's
debts would be slimmed down by FERC.
This week's farcical events make it more likely that the Edison deal will
stall out permanently in the Legislature and its creditors will force the
utility into bankruptcy court later this summer. That's part of that nasty
old reality that cannot simply be wished away.

The Bee's Dan Walters can be reached at (916) 321-1195 or dwalters@sacbee.com
.