Jeff: Anti-American Spiit has me on ignore and it REALLY needs to read this article. Would you please post it to it? Feel free to copy the entire thing if you wish.
Oh, well. Another idol has feet of clay.
www0.mercurycenter.com
Published Sunday, Aug. 5, 2001, in the San Jose
Mercury News
Many top Davis hires have ties to utility
GOVERNOR PROMOTES BAILOUT FOR EDISON
BY JOHN WOOLFOLK, STEVE JOHNSON AND
MARK GLADSTONE
Mercury News
SACRAMENTO -- As conflict-of-interest
charges swirl around the Davis administration
for its power deals, no energy company has
closer ties to the governor than Edison
International. And none could benefit as much
from his policies.
Davis has come to rely on the beleaguered $40
billion Southern California utility for the
expertise his regular advisers lack, filling the
ranks of his crisis team with Edison alumni and
consultants.
The governor hired Edison's Washington
lobbyist and its spin-meisters to promote his
energy policies. He tapped a former Edison
chief to be his representative initiating bailout
talks with the company. And Davis brought
another company official onto the state payroll
to speed production of power plants. Under
the state incentive program, one Edison project
won a $1 million early-bird bonus.
The relationship between the governor and
Edison is fueling even deeper questions as
Davis pushes an unpopular, multibillion-dollar
plan to help Edison pay off its electricity debts
while another major utility, Pacific Gas &
Electric Co., sits in bankruptcy court.
Even fellow Democrats call Davis' Edison plan an undeserved bailout.
And the company connections make many wonder whether Edison's
interests are being served over consumers'.
``It's tremendous for Edison, it's bad for the public,'' said consumer
activist Harvey Rosenfield. ``This is the company and the people who
brought us this debacle, deregulation. They are the last people you
would want to have advising the governor. They are driven by just
one thing: greed.''
Davis denies favoritism
Davis, who called Edison ``responsible and public-spirited'' in April
when he announced his $2.76 billion rescue plan, has denied any
favoritism, arguing that the state's and the company's fortunes are
intertwined. And Edison President John Bryson, a former state utility
commissioner who has known Davis since the two worked under
former Gov. Jerry Brown, has agreed.
Brian Bennett, Edison's vice president of external affairs, said the
company had nothing to do with placing officials in the Davis
administration.
``None of those decisions were made by us,'' Bennett said, adding
that it ``speaks well of the caliber of people who have worked at the
company.''
But it also speaks of a special relationship, one that differs greatly
from the energy company connections that have sparked controversy
in Sacramento over the past two weeks. Edison is different from the
hot new energy companies whose stock performance drew
investments from state regulators; its involvement in state energy
policy runs deep, and has a long history.
And while many of the advisers linked to Edison have since left their
state positions, the energy policy they helped shape hasn't shifted
course.
Deregulation backer
Like the state's two other major corporate utilities, PG&E and San
Diego Gas & Electric, Edison was a chief backer of the state's 1996
deregulation scheme. Edison alone spent more than $31 million on
campaign contributions and lobbying at the time.
That plan ended up driving utilities $14 billion into debt when
wholesale power prices soared. Sellers cut them off in January and
forced the state to begin buying power.
Since then, a cornerstone of Davis' energy policy has been restoring
the utilities to solvency through state purchases of their assets, such as
transmission lines, dams or watershed land. Democratic lawmakers
have generally endorsed the concept.
But the devil has been in the details. PG&E, unable to reach an
agreement with the administration on a bailout, filed for bankruptcy
April 6.
Three days later, Davis announced a tentative deal with Edison to buy
the utility's transmission lines for more than twice their assessed value.
Critics say Edison's influence with the governor is unorthodox and
troubling in light of what the utility stands to gain. No other company
is so well-represented in the administration.
Davis has tapped just one official with ties to PG&E.
``Davis' energy team has been top-heavy with Edison partisans from
the get-go,'' said Jim Knox, executive director of California Common
Cause. ``It is a concern, and I think it raises questions about whether
this is driving the governor's focus on saving Edison.''
Longstanding ties
The ties date back to the late 1970s, when Davis served as chief of
staff to Jerry Brown, who appointed Bryson to the state's utilities
commission, where he served from 1979 to 1982. Bryson joined
Edison in 1984, becoming head of the utility in 1990, and holding his
current title since 2000.
While Davis has stopped taking energy-related contributions in light of
the crisis, Edison was by far his biggest power-company donor.
From 1995 to 2000, Edison contributed more than $350,000 to
Davis, according to California Common Cause. By comparison,
PG&E contributed $196,000 and San Diego's utility $94,000, and
the total donations from power marketers and producers such as
Enron and Duke was $260,000.
Upon taking office, Davis appointed a former Edison utility and union
official, Carl Wood, to the state's public utilities commission.
As the power crisis erupted, Davis turned increasingly to those with
Edison ties. In late January, he tapped Michael Peevey, an economist
and Edison's president through the early 1990s, as an unpaid
consultant to negotiate utility rescue plans. Peevey no longer consults
for the state, and the Edison deal is now being handled by consultants
with no ties to the company.
Davis spokesman Steve Maviglio said there was nothing wrong with
Peevey's role in the talks.
``He had no stock or ownership in the company, but he knew the ins
and outs,'' Maviglio said. ``It was like having somebody on your team
who knew the enemy.''
Also in late January, Davis hired the Electricity Power Group, a
consulting firm led by former Edison officials, on a $6.2 million
contract through 2002 to oversee the state's power purchasing and
generation strategy.
The group's president, Vikram Budhraja, has since come under fire
for purchasing $10,000 to $100,000 worth of Edison stock and
selling it days later for a profit around the time his state contract
began.
Budhraja said he has personally recused himself from any state work
involving Edison because he has a consulting arrangement with the
utility. He also said his company isn't doing any state work that
directly affects Edison.
In February, Davis hired Edison's Larry Hamlin, who took a leave
from his job overseeing the utility's power plants, as his ``energy
construction czar.'' Hamlin's role with the state was to help accelerate
power plant approval and construction.
Hamlin, who has since rejoined Edison, said he didn't get involved in
individual plants, but did work with various state agencies to speed up
plant licensing. One new Edison plant benefited from the streamlined
approval process, qualifying for a $1 million state bonus offered to
companies that put generators online before July 1.
Maviglio said Hamlin had nothing to do with the bonus.
Edison lobbyist hired
To promote his energy policies to the public and Washington leaders,
Davis has hired consultants who also represent Edison.
The governor in March hired J. Bennett Johnston, the Democratic
former U.S. senator from Louisiana, for $25,000 on a three-month
contract to promote California's energy policies in Congress.
Johnston, a Chevron board member who had an oil tanker named in
his honor, has been on an $80,000 lobbying contract with Edison as
well.
Johnston saw no conflict, saying the state and Edison ``really have
congruent interests.''
More famously, Davis on May 21 hired public relations consultants
Mark Fabiani and Chris Lehane to shape his energy message in a
$30,000-a-month, six-month contract. The two political veterans
were known as the ``masters of disaster'' for former President Bill
Clinton and Vice President Al Gore. But when they took the state
job, they also worked for Edison.
The political nature of their work and the Edison ties drew such
criticism that Davis canceled his contract with Fabiani a month later
and told Lehane to sever his Edison deal. Lehane left soon after and
both men have since dropped requests for state payment.
The pair said that during their service to Davis, they recused
themselves from any issues involving other clients, including Edison.
The governor's office and several of the consultants said the Edison
connections were largely coincidental. Maviglio said it was S. David
Freeman, a public utility veteran whom Davis tapped as his energy
chief in May, who helped bring the Edison talent aboard. Those
officials then turned to their former colleagues to expand the team.
But as Davis urges approval of his Edison rescue this month, even
fellow Democratic lawmakers have raised eyebrows over the extent
of the company's influence.
``I think it's fair to characterize it as narrowly cast,'' said one
Democratic lawmaker, who asked not to be named because of the
sensitivity of the negotiations.
Mercury News Staff Writer Brandon Bailey contributed to this
report.
Contact John Woolfolk at jwoolfolk@sjmercury.com or (408)
278-3410. |
