Blame Game
ANOTHER BELL TOLLED FOR ENERGY-STRAPPED CALIFORNIA AS Standard & Poor’s lowered the state’s bond rating by a couple of notches, down to the same level as during the early ’90s recession.
So we have suffered a few rolling blackouts with predictions of many more on the way, steep rate hikes, one utility bankruptcy and maybe one or two more to follow, the erosion of the state’s budget surplus in order to buy power, and now, credit worries for a state that began the year rolling in dough.
All these things have come to pass despite Gov. Davis’ assurances that they wouldn’t. Some critics suggest that Davis’ biggest shortcoming in dealing with the energy crisis is that he’s not a businessman,he just doesn’t get it. But Davis does get politics. And to win a second term that until recently looked like a lock could now depend on Davis’ ability to find a scapegoat.
He’s trying. Davis or his surrogates have blamed Pete Wilson and Wilson’s Public Utilities Commission for starting this mess. They’ve railed against out-of-state (read Texas) energy producers, for “gaming” the system. (Davis always omits one of the biggest of the supposed “gamers,” the Los Angeles Department of Water and Power, from his attacks, a shameless oversight that brings sardonic smiles even to the faces of Davis supporters. It just so happens that just-resigned LADWP boss David Freeman is Davis’ go-to guy on energy matters.)
Most notably, Davis has zeroed in on the Federal Energy Regulatory Commission, for failing to place rigid price caps on wholesale energy. The political spin was in evidence on the UCI campus recently, where Davis’ highly partisan PUC chief, Loretta Lynch, accused the FERC of allowing producer-profiteers to plunder the state.
Lashing out like this is reckless policy, because it irritates two entities whose help is needed in order to fix the situation, the power generators and the federal regulators. But it would seem to serve Davis’ political ends. The more you attack Texas corporate greed and a laissez-faire attitude in Washington, D.C., the closer you presumably strike at George W. Bush. And Davis would benefit if this whole mess was recast as a political feud, rather than a policy failure.
This approach requires the suspension of reality, of course. It begs a number of questions, such as:
++Hasn’t the FERC been operating in a free-market mode for a long time now, including through all of the Clinton years? (Indeed, where was Bill, besides off granting pardons, while California slid into its energy morass in the final months/days of his administration?)
++Aren’t all three of the FERC commissioners Clinton appointees, and two of them Democrats? (Davis & Co. have aimed their criticism at Curt Hebert, a Clinton GOP appointee reappointed by Bush, but Hebert always seems to have at least one Democrat voting with him.)
++If FERC policy is to blame, why aren’t other states in the same dire predicament as California?
++Isn’t it an economic principle that price caps make scarce supplies (in this case, of energy) more scarce?
In picking on the FERC, moreover, Davis may have met his match. The FERC has a record for both bipartisanship and effectiveness, particularly in encouraging the development of natural gas reserves. And the FERC has shown an ability to engage in political tit-for-tat.
Its decision last week to place limited price controls on wholesale electricity blunted the accusations of Davis and other critics that the agency was insensitive to California’s plight. Yet the FERC also attached conditions to its promise of emergency relief that will prevent Davis from turning California into a rogue state among Western energy consumers.
Commissioner Hebert noted that the long-term solution to California’s energy shortage is in new plant construction, something that rigid price caps would discourage. And Hebert got in a good dig, exhorting California’s “leaders” to “please provide the leadership necessary and understand that this commission cannot help you if you will not help yourself.”
FERC answered demagoguery with a stiff offer and a lecture. Your move, Gray.
