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National Public Radio MORNING EDITION


California Governor Gray Davis delivers his annual State of the State address today in Sacramento. He’s not expected to make any dramatic announcements, but many California residents want Davis to address the state’s energy crisis. Rates for gas and electricity have tripled in recent weeks, threatening to end California’s economic boom. NPR’s Richard Gonzales reports both supporters and critics of the governor see this as his first big test.


During his first two years in office, Democrat Gray Davis has enjoyed remarkably smooth sailing. A high-tech boom has filled state coffers, his Republican opposition is in disarray and he has a $ 20 million-plus war chest. It’s no wonder that Davis’ name is already being floated as a possible Democratic presidential contender for 2004.

However, in recent weeks, Davis’ ship has hit a squall. Deregulation has been disastrous for many Californians. Electrical power rates are going up, the state’s two largest utilities say they are on the brink of bankruptcy, and no one believes there is a quick fix available. For his part, Davis has reminded Californians that deregulation was implemented under his Republican predecessor, Pete Wilson. But he also knows that many residents are expecting him to do something about the crisis.

Governor GRAY DAVIS (Democrat, California): Obviously, any governor, mayor, president–any executive has to manage problems as they present themselves, and even though I inherited this problem relating to electricity, it’s my obligation to do the best I can to manage the process with a minimum amount of discomfort for all concerned.

GONZALES: That puts Davis on a tightrope. He’s balancing between the interests of the power industry that has contributed hundreds of thousands of dollars to his campaign fund and the rate-paying consumers, who will vote in two years. Thus far, Davis has tried to publicly align himself with household consumers by pushing for a moderate rate increase far below what the utility companies say they need to remain solvent.

Gov. DAVIS: I am not going to do anything that unfairly burdens consumers, consumers who were promised that rates would go down. Rates have not gone down, and they’re going to have to participate in the solution.

GONZALES: Some consumer advocates appreciate that rhetoric, and they are pleased that Davis has tried to broker a deal between them and the utility companies. But others aren’t so charitable. Harvey Rosenfield is president of the Santa Monica-based Foundation for Taxpayers and Consumer Rights.

Mr. HARVEY ROSENFIELD (President, Foundation for Taxpayers and Consumer Rights): California’s in a position where we have to have bold leadership, whether it’s taking on the electricity crisis, building new roads, education system that’s falling apart. This governor is just too cautious and careful. He doesn’t want to make a move that might offend somebody, and that is not a prescription for leadership.

GONZALES: Davis is notoriously risk-averse, say Democratic lawmakers, who are reluctant to criticize him publicly. Privately, they say, they are waiting for him to step up to the plate.

Mr. BRUCE CAIN (Director, Institute for Governmental Studies, UC-Berkeley): This is definitely his moment. I mean, he–when you have to be the clean-up hitter, you have to deliver when the bases are loaded, and this is it.

GONZALES: Bruce Cain directs the Institute for Governmental Studies at UC-Berkeley. He says the governor should come up with at least an outline of a solution to the energy crisis.

Mr. CAIN: And that’s going to be very, very difficult, because he’s got on the one hand consumer groups who are livid over the breaking of the promises that were made when deregulation was put into place, and on the other hand, you have the cries of the utility companies that are going to go bankrupt and lose their line of credit, so he’s between a rock and a hard place, and there are those who feel that this was something that could have been foreseen earlier and dealt with earlier.

GONZALES: Whether Davis might have acted sooner to preempt this crisis is a matter of opinion. Republican political analyst Dan Schnur says Davis could take advantage of the state’s budget surplus and offer rate payers a one-time rebate to offset their high utility bills. In any case, says Schnur, Davis’ political future is on the line.

Mr. DAN SCHNUR (Republican Political Analyst): If he handles this well, it could be of huge benefit to him. If this electricity crisis doesn’t go so well, it could kill any presidential ambitions for Gray Davis even before they got off the ground.

GONZALES: There’s little doubt that Davis recognizes this. Perhaps that’s why he and his staff have actively discouraged talk about anything beyond his plans for re-election two years from now. Richard Gonzales, NPR News, San Francisco.

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