As Gov. Gavin Newsom responded to questions this week about power blackouts affecting hundreds of thousands of PG&E customers in Northern and Central California, he had to be thinking about a similar crisis that confronted another governor 18 years ago: Gray Davis.
Davis inherited a deregulated energy market from a bill passed without opposition in 1996 after a huge lobbying campaign funded by three private utility companies, including PG&E and Southern California Edison. It required utilities to transfer operational control of their transmission lines to an independent agency known as the Independent System Operator, or ISO. It also created incentives for utilities to sell off their generating plants to private companies.
Former Gov. Pete Wilson signed the bill and energy deregulation took effect in 1998, the year Davis was elected. It was intended to increase competition in the electricity market, and initially customers saw a drop in energy prices. But Davis soon found his agenda upended by a debacle that was largely out of his hands.
By May of 2000, the state power grid was short of power, initiating months of planned rolling blackouts and surging prices for electricity.
Most of Davis' State of the State address in January 2001 was used to address California's energy crisis.
While saying "our job today is not to engage in an ideological debate over the pros and cons of deregulation," he reminded the assembled legislators that he had nothing to do with creating the crisis, adding that proponents of deregulation "certainly didn't envision this mess, but we must face reality. California's deregulation scheme is a colossal and dangerous failure. In short, an energy nightmare."
It was also a political nightmare for Davis.
"In a period of four months in early 2001, his polling numbers completely collapsed," recalled Garry South, who was Davis's senior political adviser before and during the energy crisis. "It was shocking."
Steven Maviglio, who was Davis' press secretary at the time, recalled an "all hands on deck" mentality in the governor's office. The governor urged Californians to conserve energy to help ease the supply-and-demand problem.
"Little did we know there was an invisible hand called Enron behind everything ... which we learned only after the governor was recalled," Maviglio told KQED this week. Enron was able to exploit weaknesses in California's law, generating huge profits for themselves while contributing to the state's problems.
As Davis grappled with the crisis — urging conservation and fast-tracking new power plants to increase the supply of electricity — California continued experiencing rolling blackouts.
