Davis has no plan for solving the power crisis

By Steve Kirsch

Two of the most important attributes of a great leader are to accept responsibility and to make tough decisions. Unfortunately, Governor Davis has not yet displayed either of these attributes in attempting to solve the power crisis in California. 

Davis has known about the power shortage in California for more than six months. So while he didn't cause the problem in the first place, he's had ample time to analyze the problem, decide on the end goal, and begin implementing solutions before it developed into a crisis. Finger-pointing just isn't appropriate; Davis could have started seriously tackling this problem six months ago. 

Not only did Davis fail to address the problem then, but even today, with the utilities on the verge of collapse, he has completely failed to articulate which direction we should be moving:

  • Turn the clock back to a regulated market
  • Attempt to fix the current semi-regulated market
  • Accelerate the move to a truly deregulated market

By failing to articulate a long-term direction and a short-term plan consistent with this choice, Davis has let us all down. He's still pursuing piecemeal solutions without a coherent plan. His announcements at his state of the State address were a surprise to the utilities that he should be working in concert with to develop a solution. His attempts to have the state buy power leave us wondering whether the state will ever agree on a price, for how long, and how he expects the utilities to reimburse the state. Lastly, he has dumped the problems into the hands of a group of legislators, the vast majority of  whom are just now becoming educated on the issues. And he's provided them with an impossible challenge: to solve the problem at an unrealistic price.

It also doesn't appear that the legislature is going to solve the problem anytime soon. Consider, for example, this excerpt from the press release announcing the special legislative committee created to address the energy crisis:

The committee will work with the staff of the Speaker's Office of Oversight to determine how utility companies have spent the money they received for their stranded costs, and what generators have done with their dramatic influx of cash.

That's a very interesting academic exercise if we have a lot of time on our hands and are writing a history book. Unfortunately, neither is true. The time for analysis and re-analysis is over. We know the options. It's time to weigh those options, pick one of the three directions described earlier,  and pick specific steps out. In other words, it's time to take the information we've accumulated and make some decisions.

Six months ago, Davis could have put together a small panel of knowledgeable experts representing each major interest, given them a set of specific achievable objectives (such as recommending a long-term vision and specific short term actions consistent with that vision), and set a deadline for the results. He didn't do this then, and still hasn't even today. We still don't know who is supposed to solve this, what the constraints are, and what the deadline is.

The net result is a disaster for California. We have:

  • no short-term plan to save the utilities from bankruptcy
  • no agreement on the long-term direction
  • a Governor who has not set a clear direction and added severe constraints to any solution
  • no cohesive working group consisting of representatives of each constituency that is empowered to solve the overall problem
  • an unwieldy large special committee consisting exclusively of Assemblymembers with little to no prior experience in the problem tasked to figure out what happened and craft a solution before the utilities go out of business
  • industry groups (such as SVMG) each trying to solve the problem themselves
  • no set deadline for results

It is time to face the sad reality that our elected leadership has failed us. It is time for those of us who have lost confidence in the system and who will be most affected by the power crisis to fill the leadership vacuum in Sacramento by setting up an independent group of experts to solve this problem. It's something that should have happened six months ago. 

Steve Kirsch is CEO of Propel, a supplier of e-commerce software and a consumer of electrical power located in San Jose.

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