Published Sunday, May 20, 2001, in the San Jose Mercury News

EDITORIAL

The opinion of the Mercury News

Blackout . . . of information EVEN as he mortgages California's future to billions of dollars of electricity debt, Gray Davis is pushing the limits of how far a governor can go in denying voters information they need to judge his performance. Is he solving the state's energy crisis, or getting us in deeper? No one outside government really knows.

With the Legislature's approval, the state is buying and selling electricity -- an extraordinary step prompted by the botched deregulation of utilities and the bankruptcy of PG&E. Having the state in the power business may be unavoidable, given California's energy crisis.

Our complaint is not that the California Department of Water Resources is buying electricity on the daily spot market and under long-term contracts. Our gripe is that at the governor's instruction, state officials are doing this under a cloak of secrecy.

In principle, Californians have a right to know how their money is being spent, who's getting it, and on what terms. So far, the state has allocated $6.8 billion for these power purchases. Some observers think it may spend $10 billion by the end of the summer.

This money belongs to the taxpayers. The plan is for the state to recover the money by selling bonds that will be paid off over several decades by added charges on people's utility bills. What Californians are spending now, as taxpayers, we'll pay back, with interest, as ratepayers.

Never in California history has so much money been spent with so little public visibility. Everything about this extraordinary situation suggests that it ought to be happening in the open.

Recipients of the contracts include some of the same energy suppliers whom Davis has accused of ripping off California under the failed deregulation plan that led PG&E into bankruptcy. Yet the state won't say how much it is spending with any of them, or which companies will provide how much power, and when.

The governor says that by keeping this confidential until each contract is six months old, the state can drive better bargains on behalf of the public. There was some truth to that when the government began buying electricity in January. Now, however, the generating companies have been bargaining with the state for five months; they know what prices they're getting.

But the people of California don't, and they're tired of being kept in the dark on what's happening with their money. No fewer than 86 percent want details of the power contracts made public, according to a new statewide poll by the California First Amendment Coalition, one of several plaintiffs suing to force the state to release the information.

Predictably, most poll participants placed blame for the lack of information on utility companies, which everyone loves to hate these days. Only a fourth of the respondents blamed state officials.

Yet it is Davis and other public officials who are required by the California Public Records Act to make public ``any writing containing information relating to the conduct of the public's business.'' Two appellate court rulings have said this covers ``every conceivable kind of record.''

The governor, however, cites another state law that provides that public records may be kept secret if ``the public interest served by not making the record public clearly outweighs the public interest served by disclosure.''

But just ask yourself: Are you better served by not knowing how the state is spending billions of dollars of your money? The governor says yes. In a suit demanding immediate release of the information, we and other newspapers say no. The public interest in disclosure of these contracts is overwhelming.

Our best witness is Davis himself. He declared this an emergency. He has accused the contractors of being scoundrels. He has set in motion a process that will obligate Californians for the next 15 years to pay off billions of dollars in bonds. And he has offered no evidence that public disclosure would make it more difficult to negotiate good contracts.

The governor's office claims it is making information available. To see for yourself how tiny -- and how useless -- these tidbits are, look at www.water.ca.gov and scroll down to Energy Contract Status. It lists contracts by number, but without names of the companies or what the state is paying them. Much of the data hasn't been updated since early April. It's useless.

Yet a full and timely accounting of what the state is spending, and with whom, would be helpful.

It would give us more basis to decide whether Davis is doing a good job or a lousy one.

It would give credit-rating companies a better basis for saying how solid those energy bonds are going to be, as investments -- and thus how much interest utility customers will have to pay to entice investors to buy them. Last week the Wall Street Journal quoted an analyst at Moody's Investors Services as saying the blackout on contract information is providing precious little information.

Most important, to name names and quote prices on these contracts would give everyone a sense of whether, as some people fear, California is on a slippery slope, taking on more and more risk even as it depletes the state surplus.

Although Republican legislators are to blame for the delay, it is taking far longer than Davis predicted to get the bonds sold -- it will be mid-August at best. If it takes long enough, or if the state pays beyond a certain amount, it will have a cash-flow crisis, running out of money before the bond proceeds can replace the billions now pouring out of the general fund.

Maybe that catastrophe won't come to pass. We certainly hope not. But we're no longer willing to take Davis's word for it that what we don't know won't hurt us.

Are you?

http://www0.mercurycenter.com/cgi-bin/edtools/printpage/printpage_ba.cgi

-- Martin Thompson (mthom1927@aol.com), May 21, 2001

Answers

Remember this is not taxpayer money this GOVERNMENT money. If it were not for the goverment, these nincoompoops would leave under the freeway.

-- David Williams (DAVIDWILL@prodigy.net), May 21, 2001.

Does anybody doubt that, once these figures are known, they will be far higher than present guesstimates?

-- Uncle Fred (dogboy45@bigfoot.com), May 21, 2001.

Calif Controller To Release Power Supply Contract Details Updated: Monday, May 21, 2001 09:40 AM ET LOS ANGELES (Dow Jones)--California state Controller Kathleen Connell will release details of the state's long-term power supply contracts, including the cost per megawatt-hour, during a news conference Monday morning, according to her office.

Connell will also discuss property taxation of utilities and possible anticipation of revenues in 2002 at the 2 p.m. EST news conference in Sacramento.

Connell, a Democrat, has said the $13.4 billion in revenue bonds the state plans to sell in August to pay for electricity will last through early 2002, if power prices are about $195 a megawatt-hour in the summer. However, she said she fears prices will be much higher and the bonds will be exhausted sooner.

Connell attempted to release details in February and March on the price the state paid to secure long-term power supply contracts, but was told by Gov. Gray Davis' administration that if she released the information it could jeopardize the deals because of its competitiveness.

Connell has said the state should immediately stop buying power because of the impact it is having on the state's budget and the likelihood that other state-funded programs will be cut.

http://quicken.excite.com/investments/news_center/article/printer.dcg? story=/news/stories/dj/20010521/BT20010521002565.htm

-- Martin Thompson (mthom1927@aol.com), May 21, 2001.