Will California's Energy Crisis Mean Political Crisis for Gov. Davis?

By Cheryl K. Chumley | July 7, 2008 | 8:27pm EDT

(CNSNews.com) - California Gov. Gray Davis's political career is in jeopardy, one analyst said, unless he can fix his state's energy crisis within the next few weeks and to the satisfaction of his constituents.

Democrat Davis, regarded as the "favorite [candidate] in 2004 for the presidency" until about a month ago, according to Claremont Institute Vice President Michael Warder, is now walking a political tightrope, attempting to appease both utility companies and consumers in the face of soaring energy costs and dwindling supplies.

"Now we have this energy problem, to which he doesn't seem to be responding well," Warder said. "I think the political sharks are starting to smell some blood."

Davis fears a repeat of former California Gov. Jerry Brown's fate, Warder continued, in which the latter was held in solid political esteem and considered one of the Democratic Party's rising stars until a series of public policy crises - most notably, a fruit fly epidemic he largely ignored - caused his leadership abilities to become questioned by the voters.

Brown lost his next election, for the U.S. Senate, became chastised for such policies as the "wacky windmills" he promoted as a basis for energy over oil and nuclear sources, Warder said, and never regained the support from his party needed to become a viable presidential candidate.

Davis, former chief of staff to Brown, is now "concerned he may go the way Jerry went," Warder said.

The governor met with both Federal Reserve Chairman Alan Greenspan and Treasury Secretary Lawrence H. Summers on Tuesday for advice, but no offers to help with the state's predicament were reportedly forthcoming.

Davis also met with President Bill Clinton Wednesday to discuss ways to alleviate the electric industry's burgeoning $8 billion deficit - before bankruptcy ensues - without violating laws that prevent supply costs from being passed on to consumers living in certain areas of the state.

But blaming the governor solely for the energy crisis may be na\'efve, said Irwin Stelzer, the Hudson Institute's director of regulatory studies.

The state's energy problems began about 20 years ago, he said, when environmentalists began protesting the further development of energy businesses. Politicians, seeking public approval ratings, caved to the environmental agenda, Stelzer continued, passing laws and adopting policies that both prohibited the expansion of power supplying utilities and restricted the activities of those already established.

To this day, in California, Stelzer said, a sizeable portion of energy companies are prohibited from tapping into power because of Environmental Protection Agency rules that were once welcomed by the state's politicians and residents.

"The environmentalists wouldn't allow anyone to build new plants for the past 20 years," Stelzer said.

Energy industry officials in California could not be reached to comment on the perceived impact from environmental regulations.

Stelzer also pointed to "major policy errors" on the parts of both former and current politicians as "exacerbating" the present energy crisis.

"When they deregulated [in 1996], they didn't really deregulate," Stelzer explained. "They did, but they kept a whole bunch of regulations in the market."

One of those regulations, for example, prevented power companies from entering into long-term contracts with customers, akin to a renter leasing an apartment based on a month-to-month payment agreement, he said.

As governor, Davis oversaw the implementation of such policies, but analysts say he could offset some of the criticism he's received these past weeks by meeting with the new administration in January to discuss ways to scale back the environmental mandates against energy development in California.

President-elect George W. Bush's pick for EPA administrator is New Jersey's Republican governor, Christine Todd Whitman, generally seen as more lenient on environmental matters than the current administration's EPA chief, Carol Browner.

But no course of action Davis takes now is likely to produce any immediate benefit for his state, Stelzer said, as businesses consider "moving to Arizona" to find dependable energy sources and constituents seek to blame somebody for the crisis.

What may eventually ensue, he continued, is an onslaught of "buck passing," as utility companies, environmentalists, Davis, and government employees look more to save face and careers than to solve the energy problem.

"There are several candidates for the role of villain," Stelzer said, "and there will be a lot of blame passing going on ...but politicians are pretty skillful at passing off the blame. It's certainly clear that this isn't helpful to Davis, but I think the only thing you can predict [insofar as political futures] is that the regulatory agencies, consumer groups, politicians, will be passing the blame."

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