Lights Out For Davis?

By Terry McCarthy/Sacramento

California Governor Gray Davis was in his Sacramento office with four legislative leaders on Jan. 11 when the state went into a Stage 3 power emergency. Blackouts were imminent.

So Davis became a power broker. Literally. He got on the phone and had some juice shifted to the needy north from South California Edison; then he wheedled 133 megawatts from an out-of-state generator, as if he were borrowing a cup of sugar from a neighbor. The lights didn't go out that day, but from that moment it became clear that Davis' political future would be calibrated in megawatts--or the lack thereof.

In the two years since he was elected, Davis has triangulated obsessively, shunning confrontation and partisan dogfighting in his search for the middle ground on such issues as education, public safety and HMO reform. Because he has a reputed campaign chest of some $21 million, there is already talk of a presidential bid in 2004. He likes to be compared with British Prime Minister Tony Blair, pioneer of the moderate Third Way school of politics. "Make progress where there is already common ground--that is what I believe in," Davis told TIME in an interview last week in Sacramento. But with utilities going broke, out-of-state generators piling up huge profits and consumer groups resisting any increase in their electricity bills, the middle ground opened up under him like a fault line. "That approach may not work in this particular situation," he acknowledged.

His more deliberate actions may not work either. As the first blackouts rolled across Northern California, Davis declared a state of emergency and pushed the legislature to appropriate state funds to pay for electricity that its utilities could no longer afford. Politicians from both parties warned that Davis' plan might simply squander the state's financial reserves without increasing the long-term supply of power. But, says David Morse, an independent consumer advocate attached to the Public Utilities Commission, "there aren't a lot of pleasant choices to make."

Critics say the Governor's innate sense of caution is to blame. "This problem could have been solved six months ago and at $10 billion less for the utility companies," says Representative Keith Richman, Republican minority whip in the state assembly. Richman points out that following a spike in power rates in San Diego last August, Republicans wrote a letter to Davis calling for a special session of the legislature "to solve California's energy crisis." The Governor did not respond. "The reason we are at this crisis today is because of the Governor's lack of action and lack of leadership," says Richman.

Davis argues that he inherited the problem from the botched 1995 deregulation plan. "People said, 'Why didn't you act sooner?' It's because, like a runner looking for daylight, I was waiting to see how I could solve this problem." Since December, Davis, renowned as a micromanager, has been working 18-hour days trying to find solutions to what he delicately calls the "energy challenge." His main fear is that he will be forced to raise rates--in effect, charge consumers full price--something no politician wants to do. "I'm not raising rates; forget it," he says. He has been talking "almost every day" to former Treasury Secretary Robert Rubin, to assess how the financial markets might react to various bailout scenarios. "People always say I'm dull and boring. Well, that helps during a crisis."

Dull is fine but not inert, as his detractors charge. While 63% of Californians support the Governor overall, according to the latest polls by the Public Policy Institute of California, 62% disapprove of the way he is handling the energy crisis. He recalls being told by his old boss, former Governor Jerry Brown, that "there will come a moment when there will be a prison break or some other crisis by which the administration will be remembered, so the challenge is to be ready for that moment. This is my moment to provide leadership."

If he fails to provide it, along with a few thousand more megawatts of electricity, his own political future will start running out of energy.

--With reporting by David S. Jackson/Los Angeles

With reporting by DAVID S. JACKSON/LOS ANGELES