Can governor win California power play?

Gray Davis faced Senate yesterday with (some) renewed momentum - but a hot summer ahead.

California Gov. Gray Davis comes to Washington this week with some surprising momentum - and a chance to reframe the debate over who's to blame for his state's energy crisis.

The governor, whose poll numbers had plunged just as fast as Golden State electricity prices rose, is still fighting for political survival, not the shot at national stardom he had before electricity became his full-time job.

But by taking a more aggressive posture in recent weeks - going face-to-face with President Bush, getting an image lift from a PR firm, and winning at least modest federal price controls on wholesale power - Mr. Davis has halted his political slide.

Moreover, his effort to build bipartisan solidarity with the California congressional delegation has signaled that the power woes of America's largest state are an issue that divides not only Democrats and Republicans, but California and Washington.

"Davis has been able to do some positioning that has made him appear less vulnerable in recent weeks," says Sherry Jeffe, a political scientist at the University of Southern California. "How he fares from here will depend on how many blackouts the state has in the hot months to come and how Davis and his opponents duck and dive."

Given the problem's complexity, and the long-term nature of fixes, there's been plenty of ducking and diving to do.

Indeed, for Davis, success in coming months may rest with how he can artfully dodge attempts by other federal and state officials to pin the blame on him - and how much blame he can pin on them.

"Even more than usual in the high stakes game of politics, this is an exercise in passing the buck," says Joe Cerrell, a long-time Democratic political consultant. "You get your message out that 'hey, we are just a state, and it's the feds who are not doing their job,' or 'it's Bush who's beholden to all his energy buddies,' or that 'greedy companies are taking advantage to gouge customers.' "

The blame game is fueled in part by the all-but-impenetrable arcanery of the crisis. Despite in-depth news coverage, many citizens can't figure out why the crisis exists, what is being done about it, and who is at fault.

There are regional transmission grids that crisscross state lines, wholesale and retail pricing schemes, market and cost-based rating structures and a lexicon that includes phrases like "stranded costs," "megawatt laundering" and "market bifurcation"- plus various state and federal laws and regulatory bodies.

"My field is public finance and economy, and my eyes glaze over when I try to decipher this stuff," says Steven B. Frates, senior fellow at the Rose Institute of State and Local Government. He adds that some players don't want the public to get a clear and lucid understanding. "It would embarrass them politically."

In this situation, much accountability rests, fairly or unfairly, with the two most visible officials: the chief executives of the state (Davis) and of America (Mr. Bush).

Davis appears to have salvaged some political capital in recent weeks, starting with President Bush's first trip to the state late last month, and ending with announcements by the Federal Energy Regulatory Commission (FERC) this week that it would impose price limits on wholesale power throughout the West.

His improved fortunes are welcome news, since Davis faces a reelection bid next year. Field Polls here show a huge drop from 60 percent approval for him in January to 44 percent last month.

The new FERC rules, while not formal price caps, represent a giving of ground by Bush. Davis argued for caps while Bush was strongly against them. The governor went on a national PR blitz, including radio and TV talk shows, to say he would sue FERC if the agency did not accept its legal mandate to enforce "just and reasonable prices."

"After not being able to stand up to the energy industry, Gray Davis has finally [found] someone to stand up to, in Bush," says Doug Heller of the Foundation for Taxpayer and Consumer Rights.

Now Republicans are fighting back with a televised challenge to Davis. "He's pointing fingers and blaming others," say GOP-funded ads that began this week. "But who runs the [utility commission]? The people Gray Davis appointed."

Demonizing Davis is not completely fair, analysts point out. He inherited much of the situation he now faces: a state that did not build a single power plant in 10 years, despite growing population, per capita electricity demand, and a five-year old deregulation plan that failed to cut consumer rates.

Several other strategies have helped Davis. He hired two expensive, $30,000-per-month consultants, Chris Lehane and Mark Fabiani. Analysts see their mark in Davis' sharp attacks on Washington and alleged power profiteers.

The message was evident in Senate hearings yesterday, as Davis lashed out at FERC for failing to act against alleged price gouging by out-of-state generators.

Meanwhile, Davis has been able to keep the state's rolling blackouts to a minimum by purchasing power - albeit at exorbitant prices - courtesy of a state budget surplus of $8.5 billion.

And some electricity prices have dropped, while others have stabilized.

But some of Davis's moves have also raised critics' ire. Besides spending $6 billion of state money that was earmarked for dozens of projects, he also signed $39 billion in long-term contracts for natural gas, refusing to release details of the transaction. Several newspapers are suing to see the contracts.

"He is desperately trying to fix things in the short run to save his political skin," says Ben Paulos, program officer for the Energy Foundation. "These long-term contracts [may] be too costly when the market returns to normal."

(c) Copyright 2001. The Christian Science Monitor

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