Dim Bulbs

Greedy out-of-state profiteers make easy targets, but the real villains of California's energy debacle are the ones under the state capitol dome.

By contrast, Brulte qualifies as the big survivor, at least so far. A leader of the Republicans in the state Senate and a close California advisor to President George W. Bush, he has somehow escaped serious scrutiny for his role as the bill's official author. One reason could be that, unlike Peace, a Democrat in staunchly Republican San Diego County, where the local press has been merciless in its denunciation, Brulte enjoys a safe seat in a conservative Inland Empire district. He has even enjoyed warm relations with Davis, who has consulted with him while seeking bipartisan support for his rescue plan. Like Peace, Brulte declined to be interviewed for this article. But back in 1996 he wasn't shy in the limelight. "This is a bill that I think will go down in the history books as one of the most far-reaching and forward-thinking pieces of legislation," he proclaimed then. A Brulte staffer did supply SF Weeklywith a three-page "history" of the deregulation law that he said represented his boss' sentiments. Its succinct conclusion: "AB 1890 didn't bring about restructuring, the PUC decision did."

If there's a surprise wrinkle in Brulte's version of events, it may be his willingness to dis' fellow Republican Wilson. As with Peace, Brulte loyalists insist that their man, and indeed the Legislature itself, had little wiggle room in drafting the law, because the former governor was breathing down their necks not to change what the PUC had approved. To press the point, each office produced a copy of a letter Wilson sent to federal regulators in July 1996, a month before the bill was churned out. "For the past six years, I have made my opinion already known to each of my appointees to the [PUC] and the California Energy Commission that California can no longer abide ever increasing costs in our electric infrastructure," Wilson wrote. "I will necessarily oppose any legislation which seeks to alter the [PUC's] basic framework or time line."

While it's too early to know what the ultimate price tag for deregulation will be for the utilities' customers and the rest of California taxpayers, the early returns in the business-as-usual department aren't encouraging.

Wall Street banks with big financial stakes in deregulation are already playing an important behind-the-scenes role as the second bailout of the utilities in four years takes shape. Goldman Sachs, which has a long-standing relationship with PG&E, appears poised to become the state's financial advisor on electricity. This is the same investment behemoth that owns a natural gas subsidiary, J. Arons & Co., that would become a significant creditor if the utility were forced to file for bankruptcy. Robert Rubin, the former U.S. Treasury secretary who is now a top executive at Citigroup, is also advising Davis on strategies for dealing with the energy crisis. Citigroup's Salomon Smith Barney unit has been a frequent advisor in deals between utilities and power companies. So has another big corporate player, Credit Suisse First Boston, which was retained by Assembly Speaker Bob Hertzberg (D-Van Nuys) to help draw up legislation intended, in part, to make sure the out-of-state power generators are paid what they're owed by the utilities. Among Credit Suisse's clients are Enron, Dynegy, and North Carolina-based Duke Energy. "The statehouse has become Wall Street West," says Jamie Court, executive director of the Santa Monica-based Foundation for Taxpayer & Consumer Rights.

The group's founder, Harvey Rosenfield, has labeled the Davis rescue plan a "bailout," and in what may be the opening salvo of a consumer backlash, is talking about a ballot initiative in 2002. Stay tuned.

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