Davis' deadlines on energy much easier set than met

By Emily Bazar, Bee Staff Writer

(Published Feb. 23, 2001)

Exactly one week ago, Gov. Gray Davis sounded hopeful, optimistic even, when he predicted that the state and its debt-ridden utilities would forge an agreement by today on a plan to save the companies from financial doom.

Problem is, it won't work out that way.

Negotiations between state officials and the investor-owned utilities have produced no comprehensive agreement to announce today.

Davis' predictions during the energy crisis have been wrong before.

For weeks, he has set deadlines for agreements and legislative action that haven't been met. On deadline days, even when there's little substantive progress to report, Davis often holds news conferences anyway -- many of them on Friday afternoons after financial markets close.

The Democratic governor's office scheduled an "announcement" for today in Los Angeles, even though one utility representative said agreement is far away.

Davis' actions have fueled speculation that he's trying to force consensus by setting artificial deadlines and putting a spin on the news, and tarnishing the state's credibility in the process.

"I can't see how you would negotiate such a complex deal, like the purchase of the transmission grid, in such a short period of time. It doesn't seem realistic," said Gary Ackerman of the Western Power Trading Forum, an association of wholesale generators. "I guess the people I represent have turned it off. They have stopped listening. They hear it and say, 'OK, sure. Here's another photo op.' "

Last Friday, Davis told a gathering of reporters that state officials and the utilities would agree by today on a rescue plan for the utilities.

"I believe we'll have agreement before next week is out, on exactly what should go in a piece of legislation," he said at the time. "And hopefully, that legislation will be passed by the end of the following week."

Legislative veterans said his comments were ill-advised and unrealistic. Davis met into the night Thursday with top officials of Pacific Gas and Electric Co., but no agrement was reached.

"These are complicated problems that will not be solved overnight," said PG&E spokesman Ron Low. "On some issues, we are very far away from agreement."

Sources said PG&E has been unwilling to negotiate sale of its transmission lines, which Davis has said is a necessary component of a deal. More progress was reported with the two other near-bankrupt companies -- San Diego Gas and Electric Co. and Southern California Edison -- although sources said talks with them were far from concluded.

Davis has been setting specific deadlines for himself and the Legislature for months:

In November, the governor promised to present a comprehensive "plan" by Dec. 1 to stave off a full-blown energy crisis, but ended up offering only a modest slate of proposals.

Davis called Feb. 12 a "drop dead" date by which he hoped to cement a deal between lawmakers and the utilities. There's no deal yet.

Davis told reporters that he and the state's legislative leaders would reach a "consensus agreement" on the proposal to take to utilities by last Friday. It didn't happen; he made the announcement alone.

Leon Panetta, a White House chief of staff under former President Clinton, said it's important that the governor set deadlines because the nature of politics is to delay. However, he cautioned against missing deadlines.

"You have to be careful that you keep the deadlines you establish, because the more that you establish and not meet, the more that begins to lose its value as a political tool," Panetta said.

The governor can't continue to indefinitely set deadlines without facing consequences, cautioned Steven Fetter, managing director of the Global Power Group at Fitch, a credit-rating agency based in New York.

At some point, he warned, creditors and power suppliers may push the utilities into involuntary bankruptcy, which would trigger an official deadline that can't be ignored. The dispute would be tied up in court at a judge's discretion.

"Eventually, there is going to be a real deadline," Fetter said. "The problem is it's probably not a deadline that will be set by Gov. Davis. It's a deadline that will be set by the banks and the (electricity) suppliers."

In several cases when deadlines haven't been met, Davis has held a news conference regardless, unveiling little new information and scant detail.

On Jan. 26, for instance, the governor promoted the broad framework of a plan to save the utilities rather than a detailed plan that had been anticipated. One prong of the plan: "Aggressively promote energy efficiency, conservation and demand reduction among consumers, businesses and public entities."

Davis spokesman Steve Maviglio said that the governor continues to set deadlines because it's important to show that the state is making progress, particularly to Wall Street. He added that it's not the governor's fault the deadlines have been missed.

"Many of the dates have been blown away by factors no one has been able to foresee or have control over: court decisions, actions by creditors, weather, you name it," Maviglio said. "The governor sets deadlines that continue to move the ball forward and he has been successful at doing that."

Many of these announcements came after 2 p.m. on Fridays, triggering suggestions that the governor has attempted to spin the facts and manipulate the markets.

Timing announcements after the close of East Coast financial markets is commonly used by politicians who don't want to send stocks soaring or tumbling by making an announcement, Panetta said. "You want people to evaluate what's happening so there isn't a panic reaction to a news flash going over the wire," he said.

But market analysts say that ever since PG&E and Edison stocks plummeted, in early January, the governor's statements haven't significantly affected their performance.

"There has been so much news that has been so negative for the companies that I don't think it makes much of a difference," said Ed Schuller, a senior vice president for the full-service brokerage firm Sutro & Co. "It's beyond,that point now."

-- Swissrose (cellier3@mindspring.com), February 23, 2001