Recall Candidates Share Views on Future of State’s Electricity Market

By Published On: October 3, 2003

California’s gubernatorial candidates hold a wide range of views on the state’s electricity market, from trust in the invisible hand of the market to turning back the clock on deregulation. One thing they seem to agree on, though, is that there is a crook behind every energy deal made during the state’s electricity crisis of 2000-2001. “Lieutenant Governor Cruz Bustamante is strongly in favor of reregulation,” said Lynn Montgomery, campaign manager for the San Joaquin Valley Democrat-who has filed lawsuits against 44 natural gas companies alleging widespread price fixing and fraud for influencing price indices during the state’s power crisis. Bustamante’s office is also taking credit for a state settlement through the Attorney General’s Office for $1.8 billion with Williams Energy Services. “I will renegotiate the energy contracts,” pledged leading Republican Arnold Schwarzenegger, who believes that the cost of electricity is too high and has hampered the state’s economy. Schwarzenegger said he would take other unspecified steps to address the high cost of energy in California but has provided no clues on how he would achieve more refunds. Free-market champion Senator Tom McClintock (R-Thousand Oaks)?who has sued to completely overturn the long-term power contracts on grounds there was conflict of interest within the state bureaucracy?favors minimizing government regulations and intervention in the electricity market. He believes regulation raised electricity rates by hampering investment in new facilities, according to John Stoos, his deputy campaign manager. McClintock’s suit is currently stymied in Pasadena Superior Court by the legal maneuverings of state attorney general Bill Lockyer, said Stoos. The Green Party has called for reversing deregulation of the industry to improve safety and efficiency. Party gubernatorial candidate Peter Camejo has pledged to make California the worldwide manufacturing center for photovoltaic equipment to create an industry that will rival Silicon Valley in its heyday. “I would make championing a sane energy policy the centerpiece of my administration,” said independent Arianna Huffington, who wants to accelerate the pace of renewable energy development and has long blasted corporate crime and influence in her syndicated columns. As the candidates seek to distance themselves from energy companies as the public remains suspicious of high energy costs, it is no surprise that the industry has sat on the sidelines in the fund-raising game. The gubernatorial candidates, according to California secretary of state records, had received virtually no money from utilities, power generators, or natural gas suppliers through early September, except for one $5,000 contribution that Pacific Gas & Electric made to Bustamante. As the likelihood of the recall of Davis and election of Bustamante remains high, the lieutenant governor’s views may soon be key for the state’s electricity industry and consumers. “He believes that solving the budget crisis would be his top priority,” said Montgomery, “but reregulation of the electric industry would be near the top of his list.” Bustamante would sponsor legislation to see that the major utilities again own and operate many of their own power generation facilities under full regulation of the Public Utilities Commission, according to Montgomery. He also wants the Federal Energy Regulatory Commission to continue to investigate what happened during the state’s power crisis and how it can change its policies and operations to prevent future crises, Montgomery said. Ultimately, Bustamante favors developing more renewable power facilities in California under the state’s renewables portfolio standard to diversify and expand the state’s energy supply, she said. However, he has not yet focused on the plea of environmental groups to require large public utilities, such as the Los Angeles Department of Water & Power and the Sacramento Municipal Utility District, to meet the requirement that 20 percent of power be produced from renewable energy by 2017. McClintock has been one of the most outspoken candidates on the electricity market issue, charging that Davis put the state in hock by purchasing electric power at inflated prices to prevent Southern California Edison from going bankrupt. McClintock claims Davis did so to help his friend John Bryson, chief executive officer of Edison International. “The system the legislature put in place in 1996 was not deregulation,” said Stoos. “It changed things from a regulated monopoly to a Soviet-style exchange system.” Instead, Stoos said, McClintock would move toward the type of deregulation that has been used in telecommunications, where abundant capacity and open competition have increased consumer choices and lowered prices. “If the government was still running the phone system, we’d be using those old black rotary dial phones,” said Stoos. Under a McClintock administration, most of the new generation would be provided by nuclear and hydropower plants, Stoos said, because they would not emit air pollution and would continue to produce power should natural gas supplies tighten. McClintock, he added, would eliminate unnecessary environmental regulations to streamline the permit process for new energy facilities. Camejo and Huffington emphasize the need to develop renewable energy through a system of tax incentives. “You do a carbon tax and give advantages if they move forward,” said Camejo. “If we had leadership that pushed it, I think it would be met in California with great enthusiasm.” Camejo has proposed a $2.5 billion plan to make California the worldwide manufacturing center of photovoltaics. Under the plan, Camejo would provide $1 billion in direct subsidies and $1.5 billion in loan guarantees to have California companies alone triple current worldwide production of solar panels within seven years and eventually increase production sixfold. “It’s a huge market here,” said Huffington, who would accelerate development of renewable energy. “This could be a huge job-creation program.” The independent candidate said she envisions investing public money in solar and wind systems and in improved electric transmission facilities, citing as a model the Solar Vote project in San Francisco, in which voters passed a bond initiative to fund the conversion of city buildings to solar energy. The savings on conventional power purchases will be used to pay off the bonds. Republican Peter Ueberroth, who bowed out of the gubernatorial race earlier this week, never managed to develop an energy strategy for the state, said a campaign aide.

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