((Jack))
The power broker bill is short on details, but specifics are
supposed to be worked out in the senate.
Some suppliers say the wholesale cost may be too low. Here’s
a status report on what’s happened this week.
The state orders rolling blackouts for the first time throughout
California.
Southern California Edison failed to make 596 million in payments
due to bondholders and power suppliers. P-G and E has defaulted on 76 million in bond debt.
Among other things, an unstable market and a limited supply
from the Pacific Northwest has the state searching for much as 55 percent
of its power during peak use periods
And a new poll takes the pulse of Californians on this issue.
Nearly half blame deregulation.
One in four blame electric companies.
And one in 10 point the finger at the governor and legislature
((Jack))
Joining me now, two of the state’s top political reporters.
Ed Mendel with the San Diego Union Tribune
And Andrew Lamar from the Contra Costa Times.
ENERGY DISCUSSION
((Jack))
Ed, let me begin with you because you were covering the legislature
in 1996 when deregulation went through. Were there long, drawn-out arguments over this, or did it pass relatively
quickly? Set the scene for that.
((Ed Mendel, San Diego Union Tribune))
What had happened basically was that the state Public Utilities
Commission had decided that it was going to launch a deregulation plan.
The legislature stepped in and modified it, fashioned its own plan.
Most of the work was done in a three week conference committee involving
members of both houses. [These were]
marathon meetings, extending often well past midnight, and it became known
among some as the “Steve Peace death march.”
He was the chairman of the conference committee. He is a Democratic senator from San Diego.
((Jack))
Now at this time, the Democratic Convention was going on in
Chicago, right?
((Ed Mendel, San Diego Union Tribune))
That’s correct, that’s correct, and there was the assumption
among some, particularly some of the consumer lobbyists that they wouldn’t
be able to reach an agreement in the conference committee, so—
((Jack))
Oh, so they didn’t take it seriously? It was going to deadlock in committee?
((Ed Mendel, San Diego Union Tribune))
That’s true, some of them—
((Jack))
So the heat was off in ’96 then?
((Ed Mendel, San Diego Union Tribune))
Well, to the consumers. The
consumer lobbyists, some of them to their chagrin, wish they had been there
and paid more attention to it. Ultimately,
they ended up not supporting it, but, crucially, not opposing it either.
((Jack))
It was passed unanimously, Andrew, by everyone in the legislature,
signed by the Governor, so everybody would take responsibility and blame or
credit if it worked out, and the idea was basically a good one. It was to lower electricity rates, especially
for big customers, but now we’re really at the point where we’re really in
deep trouble with this. Have we gotten
to the point where we’re now spending taxpayer money to buy electricity?
((Andrew LaMar, Contra
Costa Times))
Absolutely. In fact,
we reached this point last week when the Department of Water Resources had
to step in to avoid blackouts last week, and what the Governor did last night
is authorize it to spend a whole lot more money and then asked the legislature
to ante in as much as 250 million dollars of money that is in the general
fund. It’s just regular money from
what the state gets from taxpayers. I’d
like to go back a little bit to what you’re talking about here with deregulation.
It’s important to remember, and I think some people have forgotten
that back when this was started, everybody believed that deregulation was
a great idea because regulation did not work in California.
Our rates were fifty-percent higher than the national average. Even consumer advocates—one of the fascinating
aspects about this is how everybody has sort of refashioned what they thought
of the measure because back then everybody embraced it, including consumer
advocates who expected savings to taxpayers, to regular ratepayers.
They got a ten percent immediate reduction for them in the legislation
itself. They were very happy about that, so you could
find very few complaints. Everybody
thought that this was going to be the answer to power rates that were much
higher in California.
((Ed Mendel, San Diego Union Tribune))
That’s a very good point, Andrew, because some of the legislators
that actually worked on the bill will tell you that their intention was to
limit deregulation to the business groups that were asking for it, but the
consumer groups who did participate in the negotiations—again, under your
assumption rates would go down with deregulation—said if there’s going to
be a benefit to the business groups, it ought to be extended to residential.
((Andrew LaMar, Contra Costa Times))
And we’ve got a case here where, should the Governor get what
he wants here at the current rate—he’s trying to negotiate with these power
generators to get contracts that would last maybe three or five years to pay
a certain rate for electricity. Now,
if he were to get it at that rate, the rates wouldn’t be substantially different
than the rates Californians were paying five years ago.
The problem is, it’s still far higher than what the cost could be or
should be under a competitive, deregulated environment.
((Jack))
When the Governor had his state of the state address, at that
point the amount of money spent by these power companies for power that they
had not recovered was about eleven to twelve billion dollars. Now, a billion dollars is a thousand million.
We’ve got twelve-thousand million on the credit card somewhere.
How does that factor into this? Where
does that go?
((Ed Mendel, San Diego Union Tribune))
Well, what the Governor said last week, the plan that he’s
trying to work on, is that he doesn’t think the amount is that high. He thinks that it’s an inflated figure because
some of the debt that the utilities are talking about is actually money that
they owe themselves for the generating power plants that they retain, and
so his plan is to get long-term contracts that average about 5.5 cents per
kilowatt hour, and the ratepayers would then continue to pay around their
standard rates. In Southern California
Edison, that’s about 7.2 cents per kilowatt hour, and it’s 6.8 or 6.9 at PG&E, which is above 5.5 cents, so that potentially
creates a revenue stream, the difference between the 5.5 and the actual bill
for consumers that could be used to pay off this huge debt however large it
is. That’s his plan. The legislature may have different ideas.
((Jack))
Andrew, when you talk to these legislators and you look them
in the eye, do they see their entire political careers collapsing in front
of them on this?
((Andrew LaMar, Contra Costa Times))
Well, no, not yet, and I think that that will change in the
next few days or may have changed just as we speak because the moment that
blackouts hit, I think you can talk to most anybody, and most any legislator
will say that the calls they got into their offices skyrocketed. You know, everybody’s lifestyle, most everybody
that was in the area of a blackout, they had to change their daily habits
in some way.
((Jack))
They were not happy.
((Andrew LaMar, Contra Costa Times))
No, people are not happy when it affects them like that.
((Jack))
Is there a sense in the legislature that this could have a
really powerful impact on California’s economy, and, it’s the sixth largest
economy in the world, subsequently, the US economy? Any sense of that at all?
((Ed Mendel, San Diego Union Tribune))
Oh, definitely. There’s
no doubt about it. The business people
have sent signals, particularly in Silicon Valley, that there is concern about
this. My impression of legislator
is that most of them think the Governor is the one that’s under the gun.
That he’s the one who ought to lead, come forward with a plan, and
that the whole thing will basically rise and fall on what he does.
((Jack))
There’s a ballot measure out there, in the last minute that
we have, that’s haunting us all because it sits on the 2002 ballot. I think in the spring before the next Gubernatorial
election. If nothing changes or if
it doesn’t change—I mean, is there any question in your mind that a ballot
measure that would re-regulate electricity—
((Andrew LaMar, Contra Costa Times))
Oh, there’s no question that it will be on the ballot. I think the consumer advocates have been very
clear about that. So, not only do
they have to solve this problem, from the Governor’s perspective and the legislature’s
perspective, but they’ve got to solve it and show some benefit from it, that
it’s working before then, or else we’re going to go back to a system that’s
completely controlled by the state.
((Jack))
In our last few minutes, let’s touch on some of the public
safety issues at the Capitol…
An investigation continues into one of the most frightening
events in recent memory. On Tuesday
night, a semi truck crashed into the south steps of the capitol…
Witnesses say it appeared intentional. They say the truck circled the Capitol several times before picking up speed and ramming
into the building...
The driver of the truck is dead, there were no other reported
injuries. The incident has revived
talk surrounding the capitol grounds with a fence. That was Pete Wilson’s idea originally, and
it just kind of went away.
((Ed Mendel, San Diego Union Tribune))
Well, it met resistance in the legislature and particularly
among a lot of local leaders in Sacramento.
Wilson’s plan was to put a fence around the Capitol. The idea being it would be something similar
to a fence that—
((Jack))
That was historically there before.
((Ed Mendel, San Diego Union Tribune))
In the last century, and people thought it was unsightly,
that it wouldn’t be very effective, and there was great concern about turning
the public’s Capitol into a fort, that it was just a bad symbol.
((Andrew LaMar, Contra Costa Times))
Yeah, and a quick note about that, I think everybody recognizes
there’s almost nothing you can do to stop somebody that wants to drive an
eighteen wheeler seventy miles an hour up the steps of the Capitol, short
of giant, concrete brick wall, so there are some things, and John Burton the
Senate leader said this yesterday. You
know, no matter what we do here, somebody could rent a hotel room across the
street and aim a missile at the Capitol if they really—
((Jack))
If they really wanted to.
In our last minute or two, back onto the energy crisis. Any hint that this is going to be a quick fix
to this, or are we going to be dealing with this, say, a year from now?
((Ed Mendel, San Diego Union Tribune))
I don’t know. The
Governor said last week that he hopes they can solve it in a couple months
and that six months from now it will be a distant memory. It is a true crisis, and I think that in one way or another it will
be solved in a few weeks.
((Jack))
Does that sound about right? Is that what lawmakers are saying? Is that what you’re hearing?
((Andrew LaMar, Contra Costa Times))
Well, six months ago, I would have believed that we’re further
along than we are now after all the outrage over what happened in San Diego,
so I never want to cast a prediction about what’s going to happen, but there
will be—even today, there is incredible concern about what’s going to happen
this summer, and that really hasn’t been taken care of, how we’re going to
meet our supply demands.
((Jack))
On that note, Ed Mendell and Andrew Lamar, thanks
for joining us.
End energy discussion
((Jack))
Just ahead . . our political insiders predict what a Bush
white house means for California as
we look for federal help in our deepening energy crisis. But first, a look
at some real life implications of California’s spiraling energy costs. Cash
strapped public schools are bracing for steep hikes in their energy bills
and finding creative ways to meet their needs. Jennifer Fischer has this story
ENERGY CRUNCH & SCHOOLS PKG.
It’s a crisp, winter Northern California
day. Students rush to class to warm
up…
But it’s
not much better inside, and they can’t forget their jackets…
Bundling
up has become part of the curriculum…
((Barbara Evans, Principal at Esparto
H.S.))
There’s no learning going on when
they’re too cold to think.
Barbara
Evans is the principal at Esparto high school.
She says the state’s energy problem is hitting this small, rural district
hard…
They’re
being forced to take extra steps in conserving heat and electricity. Last month’s utility and gas bill took the
district by surprise…
((Barbara Evans, Principal at Esparto
H.S.))
Up fifteen percent for electricity,
and up forty percent for natural gas. We’re talking about a major impact on how we run our school.
((Student))
Yeah, I wear extra clothes all the
time ‘cause it’s really cold.
These energy
guzzling boilers are more than forty years old, but will have to do.
Already on a tight budget, the school cannot afford to invest in a
modern, energy-saving system…
((Barbara Evans, Principal at Esparto
H.S.))
Basically, we’re going to be in
the hole about a hundred and thirty-eight thousand dollars, so we’re going
to have to decide as a district, a small district, what our priorities are
going to be.
((Kevin Gordon, CA Association of
School Business Officials))
Kids being a little chillier perhaps
in the winter or a little hotter perhaps in the summer with a little more
consciousness of the energy that’s being utilized is something that probably
won’t surprise a lot of people.
That’s
because it’s not just a problem here in Esparto. It’s statewide, and districts are having to make cutbacks to keep
up with rising energy costs…
Many are
afraid that they’ll have to tap into emergency funds…
((Kevin Gordon, CA Association of School Business Officials))
Districts have a reserve that they utilize for these
kinds of uncertainties, but once you exhaust a reserve that you set aside
one year, then next year you have to rebuild that reserve from scratch, and
that’s where budget choices have to be made.
Gordon
says that schools are finding creative ways to conserve energy…
((Kevin Gordon, CA Association of School Business Officials))
In one school district, they have
closed down their pool because the cost to heat the pool is simply, you know,
extraordinary.
((Jennifer Fischer, Capitolweek
Reporter))
Even on cold days like this you
can conserve?
((Mike Sanford, Esparto Unified
School District))
Sure. Lighting is a huge thing. You
know, kids and teachers need to pay attention to that. You know, just turn the lights off when you
go to recess. When you talk about
so many classes doing that, it’s a huge difference.
Principal Even says for now they’ll
just have to cope. A little less heat
in the classroom is better than cutting into extra curricular programs like
sports and music…
((Barbara Evans, Principal of Esparto
H.S.))
If we can’t pay our teachers and
coaches the money needed to keep those activities going, if we have to pay
that PG@E bill instead or that utility bill instead,
we’ll have to take the utility bill because that bill comes due at the end
of the month.
END PKG.
((Jack))
Time now . . for “at
issue”, your chance to hear behind the scenes commentary from political insiders.
Straight talk, you won’t find anywhere else
@ ISSUE: HOW WILL THE BUSH ADMINISTRATION AFFECT CALIFORNIA?
((Jack))
This week . . . George
W. Bush steps into the white house this inaugural weekend.
On Capitol Hill, the Bush cabinet slowly take shape as confirmation
hearings continue.
The most contested seat involves former senator John Ashcroft,
Bush’s nominee for Attorney General.
What do Californian’s think about a Bush white house?
Despite the controversy surrounding the election, 54 percent
of Californians polled say Bush will be a strong and capable president.
But half say the country will be divided over the next four
years.
Of course, the big question . . . .what does a bush white
house mean for California issues like energy and water?
Joining us now: Democratic Political Consultant Gale Kaufman
And GOP consultant Dan Schnur.
((Jack))
Dan, this is the President-elect who said I want to bring
the country together and govern from the middle, and John Ashcroft is not
from the middle. He’s sort of, like,
being shoved up the nose of half the people that voted in that election.
((Dan Schnur, Republican Political Consultant))
Well, a couple of things.
Just for context’s sake, it’s important to realize that this is a position
that has been filled for the last eight years by Janet Reno, so it’s not like
Bush’s predecessor did a lot to unify the country with his selection, so—
((Jack))
Yeah, but it won with a little more of a vote.
((Dan Schnur, Republican Political Consultant))
In fact, Bill Clinton was elected with only forty-three percent
of the popular vote, but the point is George Bush was elected as a center-right
conservative, and if you look at his nominees over all, he has moderates like
Colin Powell, like Paul O’neill at Treasury. He has some very ambitious reformers like Rod
Paige at Education and Tommy Thompson for Health and Welfare, and he has some
traditional conservatives like Gail Norton at Interior and John Ashcroft at
Justice. This cabinet should not be
a surprise to anyone that voted for George Bush. He never ran as anything but what this cabinet represents.
((Jack))
What does John Ashcroft mean as an Attorney General? He says he’s just going to follow orders from
the White House. Do you believe it?
((Gale Kaufman, Democratic Political Consultant))
Well, no. I don’t
believe it at all, and I don’t think anybody believes it. I think that his record speaks for itself.
His actions speak for themselves, and, I think—I disagree with Dan
on one point. I think that in the positions where someone
who was looking like a moderate in his rhetoric, especially towards the end
in a close election, the nominations of Gail Norton in particular and Linda
Chavez right off the bat and Ashcroft are absolutely just “in your face” appointments
that reflect, I think, a statement on Bush’s part of where he really is and
where he wants the justice department to be.
((Jack))
Bring this to California.
I mean, so what?
((Gale Kaufman, Democratic Political Consultant))
Well, in California I think it’s really dramatic. For a guy who said that he really believed
and cared about a lot of things in California, Gail Norton in particular. If she does what everybody assumes she will
on energy as well as environmental issues of the day, she could overturn a
lot of Clinton’s meaningful reforms, and the same with Ashcroft on issues
that, for our state, mean so much.
((Jack))
There’s that up your nose thing again.
((Dan Schnur, Republican Political Consultant))
Again, you look back eight years to Bill Clinton, and many
of the people that he brought into his cabinet, the Janet Renos, The Donna
Schulaylas, were just as representative of the extreme left of the Democratic
party as some of the conservatives that George Bush is bringing into his cabinet,
but let’s talk about California for a second. As you guys have already discussed on this
program, we’re in the middle of this miserable electricity crisis. One thing that George Bush wants to do is open
up .8 of one percent of the Alaskan Wildlife Reserve to drilling. That will provide the kind of electricity that
California needs to avoid these crises in the future. Is that extreme? No. Is that going to keep
the lights on? Yes.
((Jack))
There’s a point there because environmentally we like to produce
our electricity with natural gas which is very expensive. There’s a shortage of it.
((Gale Kaufman, Democratic Political Consultant))
Right, right.
((Jack))
That sounds like a good for California.
((Gale Kaufman, Democratic Political Consultant))
Well, I would argue that it sounds like a good idea, and I think, unfortunately, the issue is
a little more complicated than that, and I think there are a lot of people
who are going to protest very strongly Bush’s—although, he has said throughout
the campaign, this doesn’t come at a surprise, but that’s what he wants to
do, but I want to hear what else he wants to do in terms of where he’s going
to try and get energy.
((Dan Schnur, Republican Political Consultant))
Well, let’s talk about that. George Bush promised during the campaign he would not drill off
the coast of California, unless Californians wanted him—
((Gale Kaufman, Democratic Political Consultant))
But it isn’t just drilling we’re talking about.
((Dan Schnur, Republican Political Consultant))
He said he would look for alternative energy resources.
He said he would explore the very limited portion of the preserve in
Alaska, but look a little more broadly than just energy.
Here you’ve got somebody that ran on education, who’s talking about
standardized testing for teachers and students, who’s talking about accountability. Here’s a man who ran on welfare reform. He’s talking about doing the kind of things
nationally that have been successful in many states. Energy and electricity is certainly one portion of his agenda, but
if you look at the issues he ran on—education, welfare reform, tax cuts—these
may not be the kinds of things that Californians voted for, but I don’t think
they’re going to react that badly to it.
((Jack))
You know, in our recent history, as we go through this energy
crisis, Governor Davis was back at Washington several times working with the
White House, working with the Federal Energy Commission, and it didn’t really
get us anywhere. Should we feel better?
Is there a golden opportunity there—
((Gale Kaufman, Democratic Political Consultant))
Not when the negotiator—
((Jack))
Is there an opportunity there for the Bush administration?
((Gale Kaufman, Democratic Political Consultant))
There is, but not when the first negotiator that Bush put
in the room was a guy who represents ENRON.
I don’t think that’s a good signal to California that he’s going to
do anything to help the crisis, and, politically, it’s really fascinating
because he has two choices. Does he
help the guy who everybody says could be his strongest opponent and be a leader
and solve the energy crisis, which to date is the crisis that everybody—you
know, nobody can remember a crisis like that, or does he let Gray Davis sit
out there and do it alone, or come in at the last minute and try and help
out in a most political way—
((Jack))
There’s an opportunity here.
((Dan Schnur, Republican Political Consultant))
Well, if George W. Bush or his advisors watched the Governor’s
state of the state address, they are no longer worrying about him as a potential
opponent in the year two thousand and four. Having said that, I think George Bush approaches
Bill Clinton more broadly—excuse me. George Bush approaches California
more broadly very much the way that Bill Clinton did. There are fifty-four electoral votes out here. You pay attention to the state. You do what you can to help solve its problems,
and right now, I think Bush, because he’s willing to explore other sources
of electricity, will look at that as a way of bringing California out of this
crisis. Gray Davis’ political career
not withstanding.
((Jack))
Real quick, Bill Thomas is now chair of the House Way and
Means Committee. Is that a good thing
for California, or does it make any difference?
((Dan Schnur, Republican Political Consultant))
It is a good thing for California. One notable change in the Bush administration
is the center of power, the center of influence in California will shift from
the Bay Area to Southern California. Instead of Dianne Feinstein and Willie Brown and Nancy Pelosi will
have access to the White House. You’re
looking at Southern California congressman like Thomas, like David Drier,
like Chris Cox and-
(( Jack ))
Dryers not in the House Rules Committee. Does that help?
((Gale Kaufman, Democratic Political Consultant))
Juries out on that one. I
think its kind of frightening myself, but we’ll wait and see.
(( Jack ))
Thank you both, we’ll be right back for your final thoughts
on how California’s energy crisis is impacting Governor Davis’ image.
But right now, some viewer feedback.
Last week we asked you the best way to solve our energy problem.
Jerry from Lincoln writes: “Get on with the business of building power plants.”
Larry writes: “Conservation is ONLY short term . . . I think
a tiered rate structure is one solution.”
And an anonymous viewer looks to the capitol, writing:
“Duly informed legislative action is essential to prevent
companies from assuming authority.”
Thank you for your comments.
Now for final thoughts on our energy crisis.
It’s bringing a lot of national media attention, especially
to Governor Davis . . .
(VO)
But it’s may not be the kind he’s looking for. Last week’s Time Magazine featured the Governor
in its winners and losers column.
The column says, Davis
better get the light turned on before the 2002 campaign.
((Jack))
Is that in fact true?
((Gale Kaufman, Democratic Political Consultant))
Well, I think that everybody acknowledges that this is a moment
in time for Gray Davis to show his leadership and I’m sure that he will.
(( Jack ))
And if he doesn’t?
((Dan Schnur, Republican Political Consultant))
It’s a difference between politics and governing. Gray Davis is a very able politician, handling
this kind of unanticipated crisis has been
a lot harder than he expected. By
2002, if my party is smart, we are going to start calling him, “Midnight Gray
Davis”.
(( Jack ))
Well, is it because there is no easy- you can’t pass the blame
somewhere else?
((Gale Kaufman, Democratic Political Consultant))
No, and it’s a real crisis. This isn’t a political issue. This
isn’t gamesmanship. There are rolling
blackouts going on right now; and
I think that as far as the whole state is concerned, there is a real, real
nervousness about what’s going to go on for the next couple of weeks.
He has to bring in the best, the most talented people together and
solve the problem- and everybody is wishing him well to do that.
((Dan Schnur, Republican Political Consultant))
This is the most severe, real world crisis to hit the California
Capitol since the Med Fly in the 1970s. This isn’t what Gray Davis, or to be fair, any of our state legislatures
have been prepared for- they don’t know what to do. Frankly, I think your first letter writer had
the write idea. It’s time to talk
seriously about increasing the power supply.
Right now, they are focused on the short term problem, but long term
they have to get more plants up and running.
(( Jack ))
Make it or break it then.
When will we know? In the next
2002 election?
((Gale Kaufman, Democratic Political Consultant))
No, I think we will know in the next couple of weeks.
((Jack))
Thank you both for joining us.
END @ ISSUE SEGMENT
(((Jack)))
Next week, a special edition.
We’ll bring all the players in California’s energy crisis
to the table. From suppliers . . to
the utilities . .to legislators .
.to consumer advocates.
We’ll ask them how bad is this going to get and when will
it get better?
Send us your questions to capitolweek dot o-r-g so we can
use them in the discussion.
That’s our program for this week. Thank you for joining us.
I’m Jack Kavanagh. Melissa
Crowley will be back next week.
See you next time.
