Energy issue powers legislative races

Candidates from both parties hope to spin the still-relevant topic of electricity deregulation to their benefit next month

By Kiley Russell and Peter Felsenfeld CC Times 2002.2.4

With power once again flowing smoothly to TVs and toaster ovens and voter attention split by the economy and war,
California legislative candidates spend little time discussing unresolved state electricity problems.

While the state was able to muddle through the height of the crisis last year, when price spikes, blackouts and
bankruptcies made national headlines, no consensus on long-term solutions has emerged in Sacramento.

Despite the March 5 primary looming, many candidates still have not articulated clear ideas on how they would
solve problems or what future electricity markets should be like.

"On the Republican side, they're running around blaming Gray Davis," said Allan Hoffenblum, editor of Target Book,
a political field manual, and a former GOP consultant.

While Hoffenblum said Democrats are "basically rather defensive" about the power crisis and seem to be avoiding
the issue, they have redoubled criticism of the GOP and deregulation since Enron's collapse.

The energy crisis destroyed open market institutions created by deregulation, the state now buys most of the
electricity sold on the open market and customers no longer have a choice of suppliers, the hallmark of
deregulation.

Despite being bombarded by war and economic news, voters think energy prices and deregulation are among the
three top issues for the governor and state Legislature in 2002, according to a survey by the nonprofit Public Policy
Institute of California.

The survey of 954 likely voters, conducted Dec. 26 to Jan. 10, has a margin of error of plus or minus 3.5 percent.
Among likely voters, 23 percent called education the most important issue; 16 percent said electricity and 14
percent said the economy.

"Electricity is an awfully difficult issue for a candidate who hasn't been involved in trying to resolve the issue to talk
about, other than to say 'I'm for the free market or I want the government to take it over,'" Hoffenblum said.

Even so, questions remain: Should California return to a competitive market or a more regulated energy sector?
What is the state's role now that federal government is taking more responsibility for energy regulation? Should large
power users and municipalities be allowed to cut their own deals?

The issues are highlighted by the newly created California Power Authority, which can pour millions into electricity
plants and conservation programs. Authority officials want to invest in transmission lines and the ability to take over
private power plants and unfinished power projects.

GOP leaders shudder at the thought of public employees being more deeply involved in the power sector.

"It's very simple: We need to get the state of California out of the energy business," said Assembly GOP leader
Dave Cox, R-Sacramento.

The legislature needs to attract private investment to the industry by passing business-friendly laws, Cox said. "We
ought to in fact have deregulation and let the marketplace work."

While short on specifics, that's essentially what GOP candidates from the 15th Assembly District say, as well.

"In the short term, we should be getting back to what we had before, which is a regulated oligopoly, to provide some
stability," said Guy Houston, former Dublin mayor.

In the future, however, the state should "ease back into deregulation," he said.

Houston opponent Gordon Blake, secretary of the Contra Costa Republican Party, thinks the state can encourage
construction of power plants and transmission lines with relaxed regulations and possible tax breaks. He is a
nuclear power proponent.

"What I will do ... is to make sure our policies are to encourage a high supply of power," he said.

The two are running for the right to face Contra Costa County Supervisor Donna Gerber, a Walnut Creek Democrat,
in the election for the seat left vacant due to term limits by Lynn Leach, R-Walnut Creek.

The district includes Walnut Creek, Livermore, San Ramon and parts of Pleasanton, Oakley, Isleton, Brentwood,
Galt, Elk Grove and parts of Stockton.

Democrat strategists embarked on this year's political season with a two-fold energy crisis attack: to give Davis
credit for averting blackouts last summer and blame former Gov. Pete Wilson for deregulation.

The unfolding Enron debacle has made it easier, said Bob Mulholland, a state Democratic Party campaign adviser.

Headlines proclaiming Enron's role in deregulation and company connections to the GOP have been a public
relations windfall, he said.

"Now that Enron's a dirty household word, we don't have to educate voters nearly as much," he said. "Enron was the
pit bull behind deregulation; they designed it, they rammed it through, they gauged California and they got caught."

Lawsuits involving the White House could continue for months, further strengthening perceptions that Republicans
are aligned with Enron, he said.

Republican Party communications consultant Rob Stutzman claims that voters correctly blame Democrats for the
energy crisis, and that Davis accepted more Enron money than President Bush.

California Republicans plan to point out Davis' failure to convince his Public Utilities Commission appointees to enter
long-term energy contracts in 1999.

"There would have been a small rate increase, but the utilities would have remained solvent and we would have
averted a crisis," Stutzman said.

The three Democratic candidates for the state's 14th Assembly District seat, Dave Brown, Loni Hancock and
Charles Ramsey, frame the crisis as a wake-up call for Californians to conserve power and fund research into
renewable energy sources.

However, they are critical of new state long-term energy contracts.

No other parties have candidates for the heavily Democratic district, which includes Lamorinda, Pleasant Hill,
Berkeley and Richmond.

"Obviously, big mistakes were made when implementing deregulation," said Ramsey, a West Contra Costa School
trustee. "And more should have been done to protect Californian's during the transition. While it appears that the
worst is over, we learned lessons that should not be forgotten."

Brown, a former legislative analyst to two Alameda County supervisors, said the state needs to stop power
purchasing as soon as possible.

"I believe Davis had an objective -- to keep the power on," Brown said. "To satisfy that objective, he put our budget
and our bond rating in serious jeopardy. We're seeing some serious consequences, and he has to repair the
damage quickly."

Former Berkeley Mayor Loni Hancock urges the state to adopt the Kyoto Protocol principles, arguing that efforts to
reduce greenhouse gasses will force effective energy practices.

With a clear goal in mind, Californians are more likely to use energy efficient appliances and develop cleaner cars,
she said.

"We need to encourage engineers and scientists to come into the next generation of technology, which translates to
the next generation of economic development," Hancock said.