Utilities Scramble To Persuade Public Of Need For Rate Hikes

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Energy: Edison And PG&E Mount Multi-Pronged Efforts. Trade Group Airs Ad Featuring A Consumer Advocate.

Los Angeles Times

David Horowitz looked like he was deep in a cave. The longtime consumer reporter, a respected TV pioneer, sat spotlighted against a gloomy, crinkled gray backdrop as he stared into a camera and delivered his sobering message.

California utilities are in trouble, he said, and the state might wind up in the dark–the Stone Age, as it were–if consumers don’t fight back.

Here’s the odd part, though: Horowitz, the “Fight Back” man, was implying that consumers should be battling consumer advocates–his buddies, you might assume–and not the big electric utilities.

“A few activists . . . think letting utilities fail is part of the solution. They’re dead wrong,” he said. “Letting utilities fail . . . would cost us more, not less. We’ve got to fight back and keep the lights on!”

The ad, which ran on local television in Los Angeles and Sacramento for three days earlier this week, carried only the barest identification of its sponsor–a small line at the end saying

“This message sponsored by EEI.”

Only a few viewers would be likely to recognize the initials as those of the Edison Electric Institute, a Washington-based trade group for the nation’s private electric utilities. And few people probably realize that the ad was perhaps the most dramatic example of a campaign by the industry to soften public opinion about the utilities’ role in the state’s electricity crisis.

For the most part, the state’s two biggest utilities, Pacific Gas & Electric and Southern California Edison, have shied away from directly spending large amounts of money on advertising recently. A spokesman for PG&E noted that members of the state’s Public Utilities Commission had told utility executives to limit their expenses, given the companies’ claims of near-bankruptcy.

Although Edison spent about $ 1 million in December on an ad campaign featuring company Chairman John Bryson, the point he was making–that the crisis is real and threatens California’s well-being–by now is being made more forcefully by rolling blackouts.

Since then, Edison and PG&E have used a variety of other methods to get out their second message, which is that the solution to the crisis lies in the survival of the utilities and that their survival depends on consumer rate increases.

Both companies have kept their large staffs of public relations specialists busy putting out the message through what they call the “earned media,” a euphemism for free coverage in newspapers and magazines and on radio, television and the Internet.

The chairmen of the two companies, Gordon Smith of PG&E and Bryson of Edison, have barnstormed the vast regions their utilities serve, meeting with editorial boards of newspapers, including this one, to plead for editorial page support. And both companies have aggressively used their Web sites to bombard readers with their spin on how the crisis evolved and how it might be solved.

PG&E officials said their Web site was visited 21.3 million times on a single day this month, up from 992,000 times on a sample day in October. Although that doesn’t mean that 21 million people visited the site, it is at least an imprecise measure of how much interest in the energy crisis has grown. It also suggests that the company’s message is getting out to someone.

The PG&E site, featuring a nighttime scene of the Golden Gate Bridge and a rather dimly lighted San Francisco skyline, offers a suggested path out of the electricity mess through more conservation, expansion of supply and a temporary cap on wholesale prices, among other things.

“Pacific Gas & Electric Company is concerned that you be as informed as possible about the current energy crisis,” the site says. It offers the company’s most recent news releases, including one quoting Smith as saying that “we simply cannot continue to purchase power . . . at exorbitant prices that are not recovered.”

Help From Friends in Business World

The utilities have also taken advantage of help from their friends in the business world. The Los Angeles Business Advisors, a group of corporate chiefs, took out large ads in the Los Angeles Times and Sacramento Bee on Tuesday that offered a message of support for the utilities.

The ad, in the form of a letter to state leaders, urged that “every effort . . . be made to avoid the failure of our state’s major privately owned utilities.”

The ad was signed by 22 of the group’s 28 members. Conspicuously absent was Bryson, the Edison chairman, who is a member of the group (as is Times publisher John Puerner, another non-signer). Those who did sign included three executives who serve as outside members of Edison‘s board of directors: Charles Miller, chairman of Avery Dennison Inc.; Warren Christopher, former secretary of state; and Ron L. Olson, a partner in the law firm of Munger, Tolles & Olson.

The ad did not identify any of them as having ties to Edison.

“It’s a fairly big investment for our little organization,” said the group’s president, Sam Bell, who declined to say how much the group had spent. “But we just felt like the cause . . . was worth the investment.”

He said it was mere coincidence that three signers were Edison board members. In any such group of corporate heads, “there’s going to be some overlap,” he said.

He also denied that Bryson or anyone else at Edison had urged the group to take a stand.

Critics say the utilities have been peddling a message of fear to consumers in order to bail themselves out of a deregulation fiasco of their own making, even as their parent corporations remain flush with cash.

“The way PG&E has been spinning this is, ‘If we do not get a rate increase, you will not get electricity,’ ” said Mindy Spatt, media director of the Utility Reform Network in San Francisco.

“They are like a rich kid whose allowance has run out and who is standing in the street panhandling. . . . But Mom and Dad are in the mansion eating caviar.”

Horowitz Draws Fierce Attacks

No one has drawn fiercer attacks than Horowitz, who pioneered the field of consumer reporting on Los Angeles television but who has been a paid spokesman for several private causes since leaving KCBS-TV Channel 2 several years ago.

In 1998, he emerged as the official spokesman for the utility-bankrolled campaign against Proposition 9. That ballot initiative, written by consumer advocate Harvey Rosenfield, called for a 20% cut in electricity rates. Two years later, Horowitz was allied with AT&T in a campaign against a Los Angeles City Council proposal to force cable TV companies to open their high-speed Internet lines to competitors.

“He’s no consumer advocate,” scoffed Rosenfield, in one of his milder comments about Horowitz.

In his defense, Horowitz insisted that he has merely spoken out on important issues that he feels strongly about.

“I decided to speak out because I have personally never seen anything worse than the electricity situation in this state,” he said in an interview. If something isn’t done to save the utilities, “the whole state could go down,” he said.

He added that no one put words in his mouth–“That ad is my words.”

A spokesman for the Edison Electric Institute, the ad’s sponsor, said the spot was “a collaborative effort” of a Washington advertising agency and the institute’s staff.

Horowitz said he sees nothing wrong with serving as a paid spokesman for corporate interests, but also insists that it’s beside the point.

“I’m not the issue,” he said. “The ad I did on television is not the issue. How much I was paid for the ad is not the issue.”

Horowitz refused to say how much he was paid, nor would the Edison Electric Institute. Spokesman James Owen would only say that the organization spent about $ 500,000 for the ad, and that none of the money came specifically from Southern California Edison, although it does pay dues as one of many members of the institute.

Consumer Watchdog
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