Industrial Firms Work Behind Scenes on Deregulation.

Amid all the screaming and finger-pointing over California's power crisis, major industrial companies, the original force behind deregulation of the electricity market, have remained strangely silent.

Indeed, the California Manufacturers and Technology Association, which represents many of the state's aerospace companies, oil refiners and other large industrial power users, has not held a single press conference or released any set of proposals about what it wants to see done to fix the troubled system.

Instead, industry representatives are lobbying behind the scenes as they quietly back proposals to fix the system.

"The large customer organizations, particularly the California Manufacturers and Technology Association, have taken a very low-key, stay-the-course position," said Michael Shames, executive director of the Utilities Consumer Action Network, a San Diego-based consumer group that has been sharply critical of deregulation. "They have been strangely silent."

This is in sharp contrast to the steady drumbeat for deregulation that the CMTA spearheaded during the depths of the last recession. At the time, the CMTA, then known as the California Manufacturers Association, stressed in its lobbying that its major power users were paying up to 50 percent more for their power than companies in surrounding states like Arizona and Nevada were paying.

The CMTA and the California Chamber of Commerce lobbied the state's Public Utilities Commission and state legislators hard for three years. Finally, in 1996, the Legislature passed its version of deregulation and it was signed into law by then-Gov. Pete Wilson.

Now that deregulation scheme is in tatters. And, in a complete reversal from its approach five years ago, the CMTA is working quietly behind the scenes to push its agenda In short, the CMTA is seeking. to tweak the current system to reduce the likelihood of further huge power price hikes. That's largely the approach taken by Gov. Gray Davis in a set of proposals he released Dec. 1.

Calculated strategy

"Sure, we have some member companies that are frustrated by the significant power increases," said CMTA spokesman Gino DiCaro. "But we haven't been really vocal. That's a calculated strategy because the proposals that have been floated out there to fix the system are heading in the direction we want. The feeling is that we may not help mailers a whole lot by getting in there with massive press releases detailing our own proposals."

The California Chamber of Commerce has taken a similar, low-profile approach. A chamber lobbyist said it's a little premature to take a public stand.

"We haven't seen a comprehensive set of proposals emerge yet," said chamber lobbyist Dominic DiMare.

Others, like consumer advocate Shames, point out that members of the CMTA and California Chamber of Commerce have been impacted differently by the crisis.

"Some large manufacturers did very well, thank you. They locked into long-term contracts shortly after deregulation began and have reaped some significant savings," Shames said. "They are very tight-lipped about all this and understandably so. They don't want to do anything that risks changing things."

Other companies that didn't jump on the deregulation bandwagon right away have gotten hammered, especially in the San Diego area. San Diego electric customers were the first to pay the market price for electricity this summer because San Diego Gas & Electric had paid off all its debts and had been cleared to charge those market prices.

DiCaro acknowledged the varying impacts of deregulation on the CMTA's membership, but said that hasn't played a role in its decision to remain low-key.

United front

"I can assure you, there is no split on our board or on our energy committee as to what our response should be," DiCaro said.

And even though the chamber's membership is much more diverse than the CMTA's -- chamber members include large and small businesses, power-generating companies and investor-owned utilities -- lobbyist DiMare said there was no split on the chamber board over deregulation, either.

The CMTA's positions are quite similar to the proposed fixes that Davis unveiled in his Dec. 1 letter to the Federal Energy Regulatory Commission. These include:

* Eliminating representatives of outside power producers from the memberships of the California Power Exchange (which serves as an electric power trading floor) and the Independent System Operator (the entity charged with ensuring adequate deliveries of electricity);

* Cutting the red tape associated with building new power plants;

* Expanding the use of long-term contracts by utilities;

* Adopting new programs to reduce peak demand by major power users;

* Requiring utilities to hold on to their remaining generating plants.

DiCaro called the proposal to encourage companies to reduce peak power usage the CMTA's top priority, saying it would free up more power on the statewide grid. Those programs should contain some financial incentives, he said.

The major long-term solution, he said, is to streamline the permitting system for new power plants to bring new power supplies on line more quickly.

But the CMTA has not pushed for what has been a key demand made by other parties in the debate: rebates from out-of-state power producers that have reported huge profits from their power sales this past summer.

"We support the idea of refunds, but we've concluded that it's probably not going to happen, so we must turn to other solutions," DiCaro said.