Legislators to tackle utility crisis

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They insist gifts from industry won’t sway them

Sacramento Bee

When the state Legislature begins its new session in earnest this week, the utility companies and electricity generators at odds over the state’s power woes will be familiar faces at the Capitol, having showered lawmakers and Gov. Gray Davis with millions of dollars in campaign contributions in recent years.

Though lawmakers will arrive with plenty of ideas, there’s little consensus about how best to ease the energy crunch. They do agree, however, that the Legislature must play a significant role in resolving the crisis, one that owes its existence in large part to a 1996 bill that called for the deregulation of California’s electricity industry.

“The primary goal should be to protect the consumer, and it has to happen through legislation,” said Assemblyman Anthony Pescetti, R-Rancho Cordova. “The Legislature back in 1996 passed (deregulation). It’s going to have to be up to the Legislature to address the problems and concerns being raised now.”

And depending on how the Davis-appointed Public Utilities Commission acts on rate increase requests from the utilities, lawmakers also may well consider that highly charged issue.

It probably won’t be simple. The very utility companies that say their financial solvency is at stake — Pacific Gas and Electric Co. and Edison International, parent company of Southern California Edison — together made more than $6.5 million in campaign contributions to legislators and Davis between Jan. 1, 1998, and June 30, 2000, and spent more than $4.8 million on lobbyists in the 21 months ending Sept. 30, according to state records.

Davis alone has taken $445,000 from the two utility companies and at least an additional $99,000 from the producers since 1998. Moreover, Edison and PG&E together contributed $61,000 toward the passage of Propositions 12 and 13 — water and parks bond measures that Davis and his political team guided to victory in March 2000.

“The problem,” said consumer advocate Harvey Rosenfield, “is the amount of money he has taken from utility companies immediately calls into question the integrity of any decision he makes to bail them out.”

The utility company contributions have reached nearly every legislator — Republicans and Democrats, conservatives such as state Sen. Rico Oller, R-San Andreas, and liberals such as Assemblywoman Carole Migden, D-San Francisco. Legislative leaders have received the largest contributions — top Democrats averaged about $80,000 a year — while other key lawmakers have received higher-than-average contributions.

Assemblyman Rod Wright, D-Los Angeles, chairman of the Assembly’s Utilities and Commerce Committee, received more than $50,000 from the two utilities and the energy producers during the first 10 months of 2000.

The utility companies “are one of the biggest interests and they are one of the most powerful,” said Rosenfield, whose organization is opposing any rate increase for electricity ratepayers. “The question (for legislators and Davis) is what is more important to them — money from the utility companies or the votes of their constituents?”

Davis administration aides and legislators flatly dispute the notion that campaign contributions could influence their decisions, or their ability to stand up for California’s consumers.

“I don’t know that it’s fair to say, ‘They (the utilities) gave them (lawmakers) money, and the utilities get a rate increase.’ That’s not true,” said Wright. “If we pursue that logic, everybody’s corrupt.”

Senate leader John Burton, D-San Francisco, who took in more than $200,000 from utilities and producers since 1998, said his primary goal in resolving the power crisis is to protect ratepayers.

“It’s an odd person indeed who is going to let campaign contributions affect their perspective on any issue, let alone any issue that affects people’s lives and well-being in the state of California,” he said.

No matter which solution the Legislature accepts, Burton said, it must provide ratepayers with “a tangible benefit.” He has proposed, for instance, that the state assume ownership of power transmission lines, and that the Legislature create a state power authority.

Burton believes that active regulation by the state will mean that California is “no longer at the mercy of out-of-state energy providers.”

But the concept of active state regulation rankles many Republicans in the Legislature, including Assembly Republican leader Bill Campbell of Orange.

“Mr. Campbell and many other Republicans are very wary of a state government takeover of the utilities,” said spokesman James Fisfis.

According to Fisfis, Republicans are considering proposals to fast-track the building of power plants in California.

Pescetti, vice chairman of the Utilities and Commerce Committee, agrees that the Legislature should encourage the building of power plants quickly, but not at the expense of the environment.

He said there are instances in which technology will allow for the creation of cleaner, safer and more efficient power plants than built in the past. In those cases, he said, the state shouldn’t stand in the way.

On the first day of the 2000-2001 session in December, Pescetti introduced AB 30, one of several energy bills awaiting consideration by the Legislature. Among its provisions, the bill would extend through 2003 the rate reduction promised to consumers under deregulation. It also would extend through 2003 the so-called “competition transition” charges that utilities can pass on to consumers.

“We have to protect the consumer, the ratepayer, you and me,” Pescetti said. “We also need to make sure the lights are on, which may mean to a degree to protect the utilities.”

According to Wright, however, the first issue the Legislature needs to address isn’t rates, but market stability.

Wright’s AB 57 would allow the Public Utilities Commission to establish procedures so that utilities can make long-term supply contracts for the purchase of electricity. By allowing for long-term contracts, he said, the state’s power system won’t be as volatile as it is when utilities purchase energy day by day.

“Right now, we buy too much electricity on the spot market. That’s insane,” Wright said. “The commodity of electricity is too much of an necessity to have somebody get up every day to purchase it.”

Wright’s bill, along with other energy bills proposed by legislators, likely will be considered during a special session of the Legislature devoted to energy issues.

The special session — which shortens timetables and lowers vote thresholds for passing new laws — will run concurrently with the regular session.

Assembly Speaker Robert Hertzberg, D-Sherman Oaks, said that although there already are a number of ideas that have emerged from the Senate and Assembly, legislators will be open to Davis’ ideas, which he is scheduled to outline in his State of the State address Jan. 8.

“We are going to allow the governor to present his proposals to the Legislature and we will give them a full and fair hearing as we consider alternatives,” Hertzberg said.

Hertzberg said he wants to require that energy produced in California is sold to California first. He also wants the state to encourage local jurisdictions to build more power plants.

And, if it comes to it, Hertzberg said, he’s “totally open” to the idea of re-regulation.

According to Burton, all options are a possibility at this point, and no lawmaker will be immune from discussing them.

“In discussions I’ve had with the governor,” Burton said, “I believe he agrees that everything ought to be on the table.”

Consumer Watchdog
Consumer Watchdoghttps://consumerwatchdog.org
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