Newsom, PG&E and the Perils of Power Politics

As Gov. Gavin Newsom responded to questions this week about power blackouts affecting hundreds of thousands of PG&E customers in Northern and Central California, he had to be thinking about a similar crisis that confronted another governor 18 years ago: Gray Davis.

Davis inherited a deregulated energy market from a bill passed without opposition in 1996 after a huge lobbying campaign funded by three private utility companies, including PG&E and Southern California Edison. It required utilities to transfer operational control of their transmission lines to an independent agency known as the Independent System Operator, or ISO. It also created incentives for utilities to sell off their generating plants to private companies.

Former Gov. Pete Wilson signed the bill and energy deregulation took effect in 1998, the year Davis was elected. It was intended to increase competition in the electricity market, and initially customers saw a drop in energy prices. But Davis soon found his agenda upended by a debacle that was largely out of his hands.

By May of 2000, the state power grid was short of power, initiating months of planned rolling blackouts and surging prices for electricity.

Most of Davis' State of the State address in January 2001 was used to address California's energy crisis.

While saying "our job today is not to engage in an ideological debate over the pros and cons of deregulation," he reminded the assembled legislators that he had nothing to do with creating the crisis, adding that proponents of deregulation "certainly didn't envision this mess, but we must face reality. California's deregulation scheme is a colossal and dangerous failure. In short, an energy nightmare."

It was also a political nightmare for Davis.

"In a period of four months in early 2001, his polling numbers completely collapsed," recalled Garry South, who was Davis's senior political adviser before and during the energy crisis. "It was shocking."

Steven Maviglio, who was Davis' press secretary at the time, recalled an "all hands on deck" mentality in the governor's office. The governor urged Californians to conserve energy to help ease the supply-and-demand problem.

"Little did we know there was an invisible hand called Enron behind everything ... which we learned only after the governor was recalled," Maviglio told KQED this week. Enron was able to exploit weaknesses in California's law, generating huge profits for themselves while contributing to the state's problems.

As Davis grappled with the crisis — urging conservation and fast-tracking new power plants to increase the supply of electricity — California continued experiencing rolling blackouts.

South remembers "all these loudmouths who were running around calling Davis a wimp because he didn't send in the National Guard to take over the plants."

Of course it was much more complicated than that anyway. The problem was less the utilities than the outside companies like Enron.

Besides, South said, "you always have to calibrate big bold actions that you would take against the utility and the potential downsides of those actions."

Like Davis, Newsom inherited this problem. There have been years of neglect by PG&E, which has failed to properly trim trees near power lines. PG&E's negligence was ultimately blamed for downed lines that sparked some of the worst fires, including the devastating ones in Napa and Sonoma counties two years ago.

A PG&E electrical transmission line was also found to be responsible for sparking the Camp Fire last year — the deadliest and most destructive wildfire in modern California history.

Just last week, Newsom signed a package of 22 wildfire-related bills, including ones aimed at requiring companies to properly maintain their equipment by keeping trees away from utility lines. Bills authored by state Sen. Bill Dodd, D-Napa, should help mitigate the negative impact of planned power shutdowns and provide independent audits of utilities' tree trimming efforts.

But Maviglio thinks Newsom should respond more forcefully to the blackouts.

"If this continues, there has to be a longer-term strategy," Maviglio said.

"There are options out there. Putting more microgrids on the line. Being way more aggressive in cutting back some of the trees that caused this thing — that's all within the control of government," Maviglio said. "Here we are in a state that runs on electricity, the leader in technology and [that] we don't have the power to make those tools work seems kind of weird."

On Tuesday, as Newsom was surrounded by reporters asking what he planned to do about the outages, he initially noted that "it is up to them (PG&E) to make the determination of what's in the best interest of their customers they serve, in partnership and counsel with the Office of Emergency Services, Cal Fire and the experts in this field."

He added that "it is a massive inconvenience. No one wants to see this happen, but it is public safety issue, so we can avoid the occurrences we've experienced the last two years, which have been historic and devastating wildfires."

Political consultant Garry South, who worked with Newsom on his short-lived campaign for governor, which ended when Jerry Brown jumped in, recalled with a simmering rage how PG&E made matters worse for Davis in the midst of the energy crisis.

"The morning after he (Davis) gives a statewide address saying how we would get things under control, PG&E basically fucks him by going out and announcing that they're filing for bankruptcy. And so it was ugly," South said.

Tempting as it is to blame PG&E, which South describes as "an arrogant and out-of-touch company that people despise," he adds, "the average customer doesn't really care who the CEO of the company is. They don't care who is on the board. Their demand is pretty basic, which is when they turn the switch on they want the lights to go and the want the power delivered to their blender and their washing machine."

Bottom line South says, people expect the leaders they elected to fix the problem, even if they didn't create it.

Daniel Zingale, Newsom's chief strategist, says "we go into this with our eyes wide open about the fact that this shouldn't be happening. If PG&E had prioritized keeping their technologies and their systems up to date we wouldn't be having to shut off power for thousands of people in California right now."

Zingale, who also worked for Gray Davis when he was governor, says the current situation "isn't about playing the blame game," while adding, "there needs to be accountability. We don't do better in the future unless we acknowledge the ways PG&E has failed in the past."

Zingale notes that Cal Fire "has put out more than 200 fires in the past 24 hours," a reminder that power blackouts, while universally disliked, are preferable to massive devastation and loss of life.

"From literally day one, this governor made it clear that a top priority was to show people that he understood this question of wildfire threat and reliability of power was an indicator of the effectiveness of state government and had to be made a top priority.

"If you look at a week like this one where people's power is being interrupted when it shouldn't have been, the governor is out there every day available to the public media to let people know that we're keeping a close watch on this problem going forward," Zingale said.