NO POWER TO PEOPLE GOVERNOR WILL END UP BAILING OUT UTILITIES.

Byline: Ralph E. Shaffer

With a halting, stumbling delivery that raised serious doubts about his future as a national leader, Gov. Gray Davis on Monday night failed to convince hard-pressed ratepayers facing drastic increases in their monthly electric bills that he will force greedy power producers to lower their charges.

In his best Harry Truman manner, the governor threatened to use the power of eminent domain to seize generating plants in California, offering acquisition of the power distribution grid as another possibility. If he really meant to do that, Davis could be applauded for proposing a realistic step that would be in the interest of residential and business ratepayers alike.

But advocates of a state takeover of the power industry, a sensible move in light of the success of government-owned utilities in Los Angeles and elsewhere, would be naive to think that he means it. The governor's seemingly coercive ``or else'' was canceled out by a more likely course of action: major concessions to all segments of the power industry, from those greedy electricity generators to the bungling power distributors.

The governor intends to bail out two badly managed utilities, Pacific Gas and Electric and Southern California Edison, both of whom bear a major responsibility for the present crisis.

Despite their attempt to blame the evils of deregulation on others and portray it as an action against their will, both utilities were major advocates of the 1996 deregulation fiasco.

Instead of turning the attorney general loose on the gouging power generators, an action he proposed in his speech, Davis is more likely to make it easier for the struggling utilities to pay the outrageous and unjustified charge for electricity that he cited.

The governor made it clear that he will not let the utilities go bankrupt. His probable course of action is a bailout in the form of a state bond issue to help the utilities pay the usurious rates now being charged for power. It would be funded by taxpayers in the form of higher utility bills for the next decade. He foreclosed the possibility of bankruptcy by erroneously indicating that it would mean massive power blackouts.

The governor knows full well that when the major utility serving New Hampshire went bankrupt in the 1980s there was no interruption in service to consumers. Nor would that happen in California unless the governor is unwilling to assume responsibility for state operation of the power grid.

The governor's talk of using eminent domain to seize power generators recalls Harry Truman's action against ``the public be damned'' attitude of the steel industry in the early 1950s or of Franklin Roosevelt's seizure of Montgomery Ward's manufacturing plants during World War II. In those cases the presidents carried out their threats.

In a similar vein, Upton Sinclair would have undertaken state operation of idle farms and factories during the Great Depression if elected governor.

But in the present political climate the Democratic Party is dominated by an attitude that puts the demands of the business community ahead of the public's interest. This governor, who has received large campaign contributions from the power industry, is not ready to use the most potent weapon available to the state. Eminent domain under Davis is an idle threat, and the power generators know it.

Davis appointees now constitute a majority of the state Public Utilities Commission. Their action in moving unanimously last week to raise rates an average of 9 percent, while less than the utilities were seeking, is indicative of a commission that will be more than willing to impose additional rate increases as time passes. They may cleverly avoid labeling them rate increases, offering instead a euphemistic title such as the ``trust transfer amount'' on current utility bills that effectively offsets the so-called 10 percent rate reduction that went into effect with deregulation.

If the governor is truly serious about protecting the interests of consumers, he could successfully pressure the Democrat-dominated Federal Energy Regulatory Commission to place meaningful caps on the amount power producers can charge for their electricity. But the FERC, like the mainstream of the Democratic Party, is committed to ``free market'' economics and is unwilling to anger the cash cow that contributes so much to Democratic candidates at election time.

It is clear that Californians cannot expect meaningful relief from this governor or from the party that historically has stood for the interests of consumers.

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Photo: Gov. Gray Davis says he will not allow California's two largest private utilities to go bankrupt.

Associated Press