Capitol Blame Game Frays Bipartisanship

SACRAMENTO —  A jolt of partisan bickering surged through the Capitol on Wednesday as legislators sought someone to blame for California’s electricity crisis, and found targets in Gov. Gray Davis and the state Public Utilities Commission.

The Assembly opened a series of hearings into the energy crisis by delving into the activities and recent history of the PUC, the state’s regulator of electricity. As Democrats and Republicans fired on the commission from their opposing ramparts, the state Republican Party opened another front, taking out radio ads that attack Davis for his handling of the crisis.

“All this talk of bipartisanship--let’s get real, this is not bipartisan,” said Mike Florio, an attorney with the Utility Reform Network consumer group who later testified at the Assembly hearing.

The bickering came on the 24th straight day of perilously low electricity supplies in the state--yet another day of urgent meetings and court hearings as the state struggled ahead with its efforts to rebuild California’s shattered electrical power system.

In U.S. District Court, Judge Frank C. Damrell Jr. extended until 5 p.m. today a temporary restraining order requiring Reliant Energy to continue selling power to California if asked by state grid operators. The company sued the California Independent System Operator over the issue last week. Damrell said he will rule on the issue today.

Two years after electric utilities were partially deregulated in California, the state has been caught in a web of surging demand, skyrocketing prices and inadequate supplies. The state’s two biggest utilities, Southern California Edison and Pacific Gas & Electric, say they have been driven to the brink of bankruptcy, and the Legislature and Davis have responded with a $10-billion rescue plan.

At the Assembly hearing, witnesses--ranging from the PUC’s own employees and former employees to attorneys for a utility and a consumer group--portrayed the commission as an understaffed bureaucracy that struggled to deal with the new realities of deregulation.

Questions from Democrats focused on the changes at the PUC during the administrations of Republican Govs. George Deukmejian and Pete Wilson.

Republicans questioned PUC officials on the commission’s action--or lack thereof--over the last two years in response to requests by utilities to enter into long-term contracts to purchase electricity.

“The Democratic push is that Republican administrations drove away any staff at the PUC that were qualified and meant to do good,” Florio said. “The Republican push is, ‘Where was the PUC a year ago and six months ago, when it was a Gray Davis commission, and why did they fail to do what needed to be done?’ ”

In response to the Democratic questions, Paul Clannon, director of the PUC’s energy division, said the commission’s role had been transformed during the past decade “to referee from cop.”

As deregulation was launched, the PUC staff was cut from 1,140 in 1994 to 890 in 1999. Clannon’s department, which was supposed to oversee the enforcement of the utilities, saw its auditing staff drop in the 1990s from 20 to four. And the Office of Ratepayer Advocate saw its staff shrink from about 240 to 115.

The result, said senior manager David E. Morse, is that the PUC’s consumer protection arm has become less proactive and can initiate few investigations.

The hearings are scheduled to continue today.

Also today, California Republicans said they would begin running the anti-Davis ads on conservative radio stations throughout the state. They accuse Davis of “putting more energy into saving his political hide than solving this energy crisis.”

They also ridicule the governor for an executive order threatening $1,000 fines for businesses that do not dim their lights during off hours, and accuse him of moving to re-regulate utilities.

Republicans increasingly see Davis’ response to the power problem as a critical chink in the armor of the politically popular governor. Davis faces reelection next year and has been mentioned as a potential Democratic presidential candidate to challenge President George W. Bush.

Garry South, Davis’ chief campaign strategist, contrasted the ad blitz to the air of friendly cooperation that lawmakers had been pursuing in the Capitol.

He said Davis would “let this roll off his back” and not respond in kind.

“The governor is just trying to clean up the mess that he inherited,” South said. “Hopefully, these ads will be about as effective as the $15 million they spent to promote George W. Bush in California.”

He noted that it was a Republican, current Senate GOP leader Jim Brulte of Rancho Cucamonga, who authored the legislation deregulating electricity in the state, and that Republican Gov. Pete Wilson signed the bill.

If bipartisanship took a lashing, it exhibited some signs of life in the state Senate, where half a dozen lawmakers of both parties held a news conference to unveil a bill designed to speed up the siting of new power plants.

Republicans have complained that excessive bureaucracy has slowed the approval of power plants in California, leading to today’s supply crunch. The legislation, SB 28X by Sen. Byron Sher (D-Stanford), is the first proposal to specifically address that issue.

Sher, chairman of the Senate’s Natural Resources Committee, emphasized that though the bill should lead to quicker approval for plants, it would not require any significant easing of environmental safeguards.

“This measure is an important and urgent step forward in our efforts to increase electricity supply in the state without sacrificing public health and environmental protections,” he said.

Also Wednesday, an Assembly committee sought to learn what would happen to the state’s role in solving the energy crisis if the utilities win a pending federal court lawsuit against the Public Utilities Commission.

The answer was not pretty: PG&E; and Southern California Edison could win as much as $12.7 billion, the amount they allege to have run into the red as a result of failed PUC action. If so, the court would almost certainly order that the costs be borne by ratepayers in the form of double-digit rate hikes.

In other developments Wednesday:

* The San Jose-based Calpine Corp. said it had signed a $4.6-billion contract with the state to provide up to 1,000 megawatts of electricity. The 10-year, fixed-price deal with the Department of Water Resources begins Oct. 1.

* The agency that operates California’s grid reached agreement with PG&E; to move ahead on engineering and environmental studies to expand Path 15, a 90-mile stretch of transmission wire in the Central Valley that is a major bottleneck in the state’s electrical system. The expansion could take at least five years and cost $200 million to $300 million, grid officials said.

* Eight Western governors--all Republicans--signed a letter to U.S. Energy Secretary Spencer Abraham opposing wholesale price caps, which Davis had strongly supported as a means to stabilize the state’s electricity market. They said price caps would hinder the development of new generators.

* PG&E;, which has a mere nine days worth of natural gas in storage, said it had signed an agreement with a sixth gas supplier to continue selling to the utility. The company signed five contracts Tuesday, the same day a federal order forcing sales to California expired.

* Officials in British Columbia announced a major rebate plan for electrical customers of BC Hydro, which has sold $2.65 billion worth of energy on the open market this fiscal year, much of it to California. Customers of the publicly owned utility will each receive credits worth about $130 sometime in the next 60 days, the provincial Finance Ministry said. However, ministry spokesman Dwaine Martin insisted that sales to California accounted for only a small portion of the large government surplus that allowed the rebates.

* The electricity supply outlook remained uncertain as grid operators worked to balance supply and demand without benefit of a federal order compelling electricity generators to sell to the California market. The order expired Tuesday. The state was able to import about 4,000 megawatts from the Pacific Northwest, down by half from the luxe days of 1999 but about normal for this winter, which has been a poor year for hydroelectric power.

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Bustillo and Reiterman reported from Sacramento and Landsberg from Los Angeles. Times staff writers Carl Ingram, Dan Morain, Rone Tempest, Nancy Vogel and Jenifer Warren contributed from Sacramento, and Nancy Rivera Brooks contributed from Los Angeles.