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Gov. Davis names Freeman to head state power authority

SACRAMENTO (AP) – Gov. Gray Davis named four board members of the state’s first public power authority Monday, tapping S. David Freeman, his chief energy adviser and an ardent supporter of public power, to lead the new group.

Two of the other appointees are also board members of the California Foundation on the Environment and the Economy, a nonprofit foundation paid for by utilities and energy companies. That prompted consumer advocates to call those members too close to the energy industry.

Along with Freeman, Davis appointed Sunne W. McPeak, Donald Vial and John R. Stevens, Davis’ former staff director. By law, the fifth board member of the California Consumer Power and Conservation Financing Authority is state Treasurer Phil Angelides.



Freeman, 75, has also led the Tennessee Valley Authority and the Los Angeles Department of Water and Power. In the mid-1960s, he was appointed by President Lyndon Johnson as the nation’s first coordinator of energy policy, a role he maintained under presidents Nixon and Carter.

Created by the Legislature this spring, the power authority can issue up to $5 billion in bonds to buy, lease or build power plants.



Vial is chairman of the nonprofit foundation that has bankrolled trips to Ireland, Spain and South Africa for lawmakers and Public Utilities Commission members.

McPeak, president of the Bay Area Council, was a Contra Costa County supervisor from 1978 to 1994. McPeak is also a CFEE board member.

”There isn’t anybody who has made a career of fighting to protect consumers,” said Doug Heller, a consumer advocate with the Foundation for Consumer and Taxpayer Rights.

Nettie Hoge, executive director of The Utility Reform Network, called the foundation, although nonprofit, a way for the energy industry to lobby public officials.

”We’re troubled that the governor wasn’t extra cautious in vetting all this beforehand,” Hoge said. ”It was pretty predictable that it could have the appearance of a conflict.”

But consumer advocate Michael Shames of the San Diego-based Utility Consumers Action Network called the appointments ”pretty darn good.

”All of the appointees are knowledgeable, capable veterans of energy issues and I think they create a nucleus of a very strong board,” Shames said.

Vial was appointed by then-Gov. Jerry Brown in 1983 as a PUC commissioner, and was the commission’s lone Democratic commissioner when he voted against a 1987 rule allowing utilities’ parent companies to form holding companies.

Hoge said Vial had a reputation of ”trying hard to do good by the regular person. Don was always skeptical of deregulation.”

Angelides had urged creating the power authority and said the agency will give the state more control over its wholesale electricity market by building and operating its own power plants. Since May 2000, the state’s market has been in turmoil as record high wholesale prices pushed three utilities to the brink of bankruptcy.

One utility, Pacific Gas and Electric Co., filed for Chapter 11 bankruptcy protection in April. Two others, San Diego Gas & Electric Co. and Southern California Edison, have struck deals with the governor that would allow them to issue bonds to get out from under their debts.

A state-run power authority could counter price spikes, Angelides said, by selling power ”at cost, not cost plus an arm and a leg.” State-owned plants could also increase supply and lower wholesale prices.

But not everyone is convinced that’s going to be necessary.

Now that some analysts believe California could face an energy glut in the next two years, the state doesn’t need to build plants, said Peter Navarro, a University of California, Irvine economics professor and energy market analyst.

Davis or legislators haven’t detailed a vision for the state’s future energy market, which makes creating ”a huge bureaucracy” for power a mistake, Navarro said.

In a statement, Davis said the authority would supplement but not replace private sector plant construction and generation.

While the authority’s role hasn’t been clearly articulated, it may end up as the manager of long-term power contracts, not as a competitor to wholesale power generators, said Severin Borenstein, director of the University of California Energy Institute at Berkeley.

Created in a bill by Senate Leader John Burton, D-San Francisco, the authority is modeled after New York state’s, which has 10 power plants, 1,400 miles of transmission lines and produces about 25 percent of the state’s power.

The power authority’s first meeting is scheduled for Aug. 24.


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