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In Calif., Growing Rage on Energy

By Rene Sanchez Washington Post Staff Writer Sunday, February 11, 2001; Page A01

ROSEMEAD, Calif. – All day long, they come in griping and worried, lining up at Sunseri's corner market to pay rising utility bills and dropping hints of revenge.

To listen to residents in this multicultural suburb east of Los Angeles complain about California's excruciating energy crisis is to hear the first rumblings of a threat that state leaders fear almost as much as another round of rolling blackouts: a ratepayers' revolt.

"Were these problems our fault? No," said Maria Jara, a small business owner, after paying her bills at the store. "But it sounds like the people are going to be the ones paying to fix all the electricity problems. It's a scam. We shouldn't let it happen."

That mood is gripping the state. And it also is taking hold across the West, where the soaring cost of wholesale electrical power and natural gas has doubled monthly utility rates for many exasperated residents and has prompted eight governors to call for federal price caps.

To keep its lights on and its two largest utility companies out of bankruptcy, California is on the verge of spending as much as $20 billion, a staggering tab that consumers could be forced to pay through years of artificially higher energy bills.

But even as California's elected leaders call the recovery plan taking shape the state's best hope, they sound wary of the public fury it may soon unleash. Some are bracing for an uprising seismically comparable to the tax rebellion here in the late 1970s that spawned Proposition 13. That groundbreaking ballot initiative restricted property tax increases, spread to other states and still greatly affects public policy in California.

Consumer rights groups, angry over the state response to its power predicament, already are planning such a campaign. "Public outrage over what's happening is palpable," said Matt Freedman of the Utility Reform Network, a consumer group based in San Francisco. "If the burden falls on consumers, there will be hell to pay."

Signs of a budding public backlash are abundant: Ballot proposals that would radically revamp California's system for delivering electricity to consumers are in the works. Irate customers are besieging utility companies with phone calls. The state senator who was an architect of the partial electricity deregulation law that helped put California in its dire energy bind abruptly ended the campaign he had started for statewide office, sensing it could be political suicide.

Demonstrators are gathering outside state offices vowing to fight any publicly financed bailout of the debt-ridden utility companies. Polls show that nearly 60 percent of California voters believe the power shortages that have led to blackouts twice this year are mostly a ploy by energy companies to raise rates.

One survey by the independent Field Poll had this striking finding: Nearly two-thirds of California residents preferred an occasional blackout to higher electricity costs.

"There is a loud and clear message coming from the electorate," said Mark Di Camillo, director of the Field Poll. "If rates go up much, they are going to have a fit."

California already has been shaken by such an uproar. Last summer, San Diego became the first region in the state exposed to wild rate increases in an unregulated energy market. The electric bills of many households and businesses tripled in a matter of weeks, igniting furious protests.

Some residents took to the streets and held candlelight vigils to demand relief. Others staged a public burning of their bills. Consumer groups aired radio and television ads urging residents to pay only what they considered a fair price for electricity and dared the utilities to resort to widespread power cutoffs. A few merchants were even driven out of business. Finally, the state stepped in and imposed new rate caps.

"I think the state understands now that allowing anything like that to happen again would be untenable," said Michael Shames, executive director of the Utility Consumers' Action Network, an advocacy group based in San Diego. "But it faces quite a dilemma."

As California struggles through daily power shortage warnings, Gov. Gray Davis (D) and legislative leaders are rushing to find remedies to the crisis that do not include sudden, steep rate increases. Davis wants to spend $800 million to increase energy conservation. He is requiring retailers to turn off outdoor lighting during nonbusiness hours. This past Thursday, he issued an emergency order to increase production at power plants and to speed the construction of new ones.

State lawmakers also are racing to save the utilities because they suspect a plunge into bankruptcy could cause a judge to impose huge rate increases to cover their debts. And if that occurred, one of California's most vital resources – electricity – could be caught in one of its most unpredictable and powerful political habits.

Voters reeling from rate shock, Davis said in a recent interview, "will be attracted to ballot initiatives, even one that seems irrational on its face."

California has learned the hard way not to take that grass-roots threat lightly. Davis saw the anti-tax frenzy that seized the state in the late 1970s up close. He was the chief of staff for then-Gov. Jerry Brown. During the last decade, voters also passed initiatives forcing California to become the first state to ban affirmative action, bilingual education and public aid to illegal immigrants and their children.

Consumer groups sought to overturn the state's electricity deregulation law two years ago by popular vote but failed. Utility companies spent $40 million opposing the ballot measure. At the time, the public also had not been stung by rolling blackouts, increasing energy costs or the massive checks the state has begun writing to keep power flowing.

But polls show that California voters are now paying close attention to the consequences of electricity deregulation. And consumer groups advocating a state takeover of the electricity industry and a new ban on rate increases say growing public dismay with the energy crisis makes those ideas far more likely to pass on the ballot.

"Last time we couldn't get people engaged because they weren't seeing a problem," said Harry Snyder, a senior official of Consumers Union. "Now they are reminded of it every day. They are going to want to take control."

To some state leaders, the die already has been cast. California's electricity deregulation law prohibits utilities from passing on the cost of buying wholesale power to consumers until next year. But Southern California Edison will be in federal court in Los Angeles on Monday seeking to raise rates immediately by as much as 30 percent. San Diego Gas and Electric Co. wants to raise its rates by 17 percent. Last month, to help ease the energy crisis, the state public utilities commission approved a rate increase of about 10 percent.

The $10 billion in bonds that California has begun using to buy power directly from suppliers also will be paid for by the public. Under the plan, rates for consumers who keep their energy use at state-recommended levels would stay relatively fixed. But consumers who do not conserve as much would be subject to billing increases. This week, California also may commit roughly another $10 billion to keep the utility companies solvent.

Davis contends those steps and others will save consumers from what they dread most: a rate explosion like the one that rocked San Diego last summer. But he may have a tough job selling the measures.

"We're all terrified," said Betty Jo Toccoli, president of the Small Business Association of California, which represents 187,000 merchants. "Our members are worried that they are going to keep getting hit with this problem again and again."

Consumer groups are launching petition drives statewide. Community agencies say the funds they set aside to help the needy with utility costs are being tapped out. And in the bill-paying line at Sunseri's market, frustrated residents sound ready to fight higher rates.

"In my house now I'm always telling everyone to turn off the lights, but then the bill is still higher," said Gregoria Martinez, a grandmother. "How can they keep doing this?"

http://www.washingtonpost.com/ac2/wp-dyn/A51241-2001Feb9?language=printer

-- Martin Thompson (mthom1927@aol.com), February 10, 2001