The San Francisco Chronicle

Gov. Gray Davis drew yesterday from his own inner circle and the business world to create a public Power Authority that takes control this week over California’s energy future.

Davis’ four appointments will join state Treasurer Phil Angelides in forming the new five-member board, which can issue billions of dollars in bonds, build and purchase power plants and gas pipelines, and ultimately attempt to secure a surplus of energy for California.

“It’s partly a matter of filling the hole that the private sector is not filling,” Angelides said, “but it’s also building a system so we are never again victimized by markets that are unregulated and out of control.”

Davis appointed S. David Freeman, who is expected to be named chairman of the authority’s new board. A longtime advocate of public power and energy conservation, Freeman is the former head of the Tennessee Valley Authority and the Los Angeles Department of Water and Power. He is currently one of Davis’ closest energy advisers.

Davis also appointed Sunne Wright McPeak, former Contra Costa County supervisor and president of the Bay Area Council, a business group that studies how economic growth affects the quality of life. She also has worked extensively on water policy and the future of the bay-delta ecosystem.

John R. Stevens, Davis’ former staff director and current energy adviser, also joins the board.

One Davis appointment yesterday drew cautious concern from consumer advocates because of his links to the energy industry: Donald Vial, a former Public Utilities Commissioner appointed by then-Gov. Jerry Brown.

Vial currently is the chairman of a San Francisco nonprofit foundation that includes labor and environmental activists, but also executives from some of the country’s largest energy firms, utilities and developers.

The group, the California Foundation on the Environment and the Economy, mostly holds seminars with various interest groups on business and environmental issues. Its board of directors include executives from Mirant, Calpine, Pacific Gas and Electric Co., Enron Corp., Reliant, AES, and Sempra Energy companies. McPeak also serves on the board.

Consumer activists said Vial’s work with the foundation mostly includes education and public policy research, although they said his connection to the energy industry is troubling. When Vial was a PUC commissioner, from 1983 to 1989, he expressed deep concerns about deregulation, advocates said.

“I think he was a friend of the consumer and he was a friend of labor,” said Nettie Hoge, executive director of The Utility Reform Network based in San Francisco. “He was very opposed to most of deregulation and very distressed about the notion of competition in the electricity area, and felt early on that this was not going to be good for consumers.”

Doug Heller with the Foundation for Taxpayer and Consumer Rights, said Vial’s appointment is “awkward” and raises questions about the mission of the authority. In his statement, Davis said the new power authority’s job “is to supplement, not supplant private sector initiatives,” but Heller said the authority should swing the other way.

“We are creating a public power system because the private energy industry has not only failed California it has devastated the state,” Heller said. “The public power authority should not be attached in any way to the private companies that have ravaged California.”

A Davis spokesman said Vial was a good choice.

“You can put his (Vial’s) public record when it comes to consumers against anybody’s,” said Roger Salazar, a spokesman for Davis, adding: “This guy isn’t anyone’s lackey.”

All of Davis’ appointees must be confirmed by the state Senate.