'I kept the lights on,' Davis says in a rail against critics

Displaying anger and exasperation, Gov. Gray Davis vigorously defended his handling of California's energy crisis yesterday and asserted that his policies saved the Golden State from severe economic decline.

"I kept the lights on," Davis said in an interview with editors at The San Diego Union-Tribune. "It just sounds a little presumptuous, but I think I should at least get a round of applause. I don't get squat."

Davis also drew a sharp distinction between himself and Bill Simon, his Republican challenger in the governor's race, declaring that he opposes deregulation, which Simon supports.

"Deregulation was a total scam to rip off consumers," Davis said of the 1996 legislation that ended regulation of much of the state's electricity supply.

The governor said he rejected suggestions from power companies to raise rates to cover soaring costs – as they did during the first months of the crisis in San Diego – because that would have caused 400 percent increases for consumers.

On the other hand, Davis said he rejected, for practical reasons, the idea of seizing power plants and compensating their owners.

"I didn't think seizing a power plant that is 30 to 40 years old would be a good expenditure of money," Davis said, referring to the state's aging power plants.

Instead, Davis said he tamed the crisis through conservation, speeding power-plant approvals and negotiating long-term contracts, along with assistance he acknowledged from federal regulators who imposed price controls.

Davis bristled when asked about criticism that he panicked and paid too much for power in those long-term agreements.

"If I didn't panic, you wouldn't be able to put out your paper," he said, visibly agitated. " . . . I kept the lights on in this state, do you understand that? I kept the lights on! (Critics) don't know what they're talking about."

The agreements were signed at the height of the electricity crisis last year and bind the state to $43 billion in electricity purchases over two decades, at prices now more than twice the going rate for electricity. Davis said he is continuing efforts to renegotiate the contracts.

"We are very close to a substantial reduction with one of the generators," Davis said.

But the governor added that only a minority of the suppliers is negotiating in good faith for new terms in the agreements, which the state is seeking.

"Only about 25 percent of the generators are talking," Davis said. "Another 25 percent are going through the motions and the other 50 percent have told us to take a flying leap."

But Davis said he is confident the Federal Energy Regulatory Commission will assist the state in restructuring the long-term electricity contracts. The governor agreed that the commission might attempt to force California to relinquish control of its electric transmission system as the price of its help with the contracts, but vowed to fight that move.

"There's no advantage for us in joining a regional (transmission grid)," he said.

Davis also reported that he has received "private assurances" from Patrick Wood III, the chairman of the FERC, that rules will be put in place to prevent "disruption" of the California electricity markets, when the electricity price caps expire, which is scheduled for Sept. 30. State officials are asking for extensions of the caps.

He criticized California's electricity deregulation, calling it a "scam," but hinted, as he has in the past, that his assessment might change if the state had electricity generating reserves of at least 15 percent, a cushion he presumably believes would prevent manipulated shortages and gouging.

Davis singled out Dynegy, Duke and Reliant – major state suppliers – for exacerbating the crisis of 2000 and 2001 by charging high prices.

Surprisingly, Davis offered a pat on the back to Enron, the bankrupt Houston power trader accused of fraud. "Enron was the best of the lot," he said. "They dealt with us more honestly."

But Enron, once the nation's largest electricity trader, stands accused by Attorney General Bill Lockyer and others as having been a prime force behind the manipulation of the state electricity.

Enron and other suppliers deny the charges and say the crisis in California was caused by electricity shortages.

During the height of the crisis, Davis repeatedly accused Texas-based power executives of price-gouging.

Looking toward the November general election, Davis confidently predicted he will defeat Simon by 10 percentage points and suggested his opponent, a political neophyte, lacks the experience to be chief executive of the nation's most-populous state.

The governor's comments marked his most-detailed defense of his energy policies since learning Tuesday night that his opponent will be Simon, a Los Angeles businessman who argues that growth and prosperity are best nourished by reduced taxation and regulation.

Davis' comments were made during a question-and-answer meeting with the Union-Tribune editorial board, attended by editors and reporters from the newsroom. The board regularly invites newsmakers to discuss current events.

Davis touts himself as a pro-business Democrat, but he said government intervention in markets is appropriate during emergencies. "If there ever was a role for government, it is to make sure the unbridled market does not make the state dark," he said.

Placing himself back at the peak of the crisis, Davis said: "What am I going to do? The utilities are in bankruptcy. Nobody can buy the power; there's no credit-worthy buyer. What would you have done? Tell me what you would have done?"

Had the state not signed the contracts, Davis said, "we would have (had) several more blackouts, businesses may have left the state . . .

"You hired me to get a job done, I got the job done and I'm plenty tired of people sitting on the fence saying, 'Oh, we should have done this, and should have done that.' Let them run for governor."

Earlier yesterday, Davis toured a new skilled nursing facility at the Veterans Home of California in Chula Vista, meeting with its first four residents.

Davis told Terry Boucher, a World War II Navy veteran: "You look awfully darn good."

If I were Bush, I would ask FERC to extend the price caps until after the election.

Great idea. Davis loudly trumpeted that fact that he forced FERC to give him "price caps", although he knew very well that the "mitigation plan" did no such thing. Make him eat his own words!

Davis is desperate to get the focus of the CA power crisis off him and back on the Bush Administration. All the recent baseless lawsuits and appeals to FERC are evidence of this.

He's even trying to ride the rage against Enron even though Enron actually did little business with CA compared to other major brokers.

Since Bush's energy bill earmarks tons of money for CA to improve its transmission grid and other provisions that would help CA get more power at cheaper rates, it would be difficult for Davis to go after it.

Simon with all the help Bush can give him, should work to keep the energy debacle squarely where it belongs, on Davis's shoulders. The extension of the price caps will help do that.

Bush might be best served to do it soon, so Davis and his cronies cannot get an inch of traction on the issue. But then make a big deal of the fact that he did it in the fall when people are thinking about the election.

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