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Genesis of recall rooted in California energy crisis

By Thom Patterson

California Gov. Gray Davis inherited the state's deregulated electricity industry.
California Gov. Gray Davis inherited the state's deregulated electricity industry.

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Gray Davis
Government Debt
California Recall
Power Outage

(CNN) -- California's electricity crisis of 2000 helped spark an unprecedented recall election three years later aimed at ousting Democratic Gov. Gray Davis.

When first elected in 1998, Davis inherited California's deregulated electricity industry, and by May of 2000, the Golden State's power supply was becoming dangerously low. (Special Report: California Power Crisis)

It became clear that power utilities couldn't pay the hundreds of millions of dollars owed to wholesalers for providing extra power during peak periods. As debts grew higher, wholesalers stopped selling electricity to the state's utilities. (Mistakes of deregulation)

On June 14, 2000, blackouts began.

To avoid uncontrolled statewide blackouts, officials ordered moving, regional power outages -- so-called rolling blackouts -- the largest planned blackouts since World War II.

During the following months, Davis made several public pleas for Californians to conserve electricity. On January 18, 2001, he declared a state of emergency, calling on the legislature to appropriate funds to pay for additional power.

Davis laid the blame for the crisis on both the utility companies and the wholesale energy providers, while angry voters pointed fingers at the governor, renaming the blackouts "gray-outs."

Though the industry had been deregulated in 1996, under his predecessor Pete Wilson, voter discontent with Davis grew after the blackouts went into effect, as other issues also chipped away at his approval ratings. Critics contended that, while it was the Republican Wilson who signed the deregulation bill, Davis did not act effectively when early power shortages signaled a looming crisis.

Finally, this year, lingering dissatisfaction with his handling of the energy crisis combined with a $38 billion state budget deficit prompted a Republican-led effort to recall Davis from office. (California's golden economy tarnishes)

Though a recent budget agreement between Democratic and Republican legislators in Sacramento eliminated the state's $38 billion deficit through cuts and borrowing, it created an expected shortfall of at least $8 billion for the next fiscal year.

California Republican Rep. Darrell Issa spent more than $1 million of his own money to finance a successful petition drive to hold a gubernatorial recall election. The recall effort was certified and Election Day was set for October 7. Issa was among the first of more than 130 candidates who sought to replace Davis as governor. He has since dropped out of the race. (135 candidates on ballot)

According to Los Angeles Times political correspondent Ron Brownstein, Davis' current political problems began with the power crisis.

"The energy crisis created the image of vacillation and indecisiveness that began his problems," said Brownstein, who is also a CNN political analyst.

"It was the beginning of the downward spiral in the sense that he didn't act fast enough and it was what set his approval rate declining, which really is the root of the situation he finds himself in now," Brownstein said.

Three years after the blackouts began -- an eternity in politics because of forgetful voters -- outages are no longer an immediate threat. But the issue is not forgotten.

Timothy Hodson, director of the Center for California Studies in Sacramento, California, agreed that -- although Davis inherited a flawed system -- he did mismanage the energy crisis.

"I think they are angry with what they perceive as a failed governorship, as a failed leadership," Hodson said. "And the energy crisis is, to a lot of voters, one of the most powerful symbols."

On August 19, Davis chose to put it at the top of the so-called mea culpa speech he delivered at the University of Southern California, Los Angeles. (Davis acknowledges faults, slams GOP)

"I know that many of you feel that I was slow to act during the energy crisis," Davis said. "I got your message and I accept the criticism."

Davis also implied that California's electricity situation has improved by referring to the August 14 blackout that unexpectedly darkened portions of several northeastern states and parts of Canada.

"Fifty million Americans lost electricity for 29 hours," Davis said of the nation's worst blackout. "In California, not a single light has gone out in the last two years."

On CNN's "Larry King Live" on Sunday, Davis said he used his emergency powers to accelerate construction of more energy plants over the last two years. Asked by King if he shares any of the blame for the state's energy crisis, Davis said: "Only that I did not communicate clearly what was happening and I took too long to act."

Davis' mea culpa speech was strategic, according to Brownstein.

"He has tried to lance the boil -- in effect -- by taking some of the blame by saying 'Yes, you know what, maybe I did screw up a little bit, but I've learned my lesson,'" Brownstein said. "He has tried to acknowledge voter disappointment over that -- very directly."

Candidates weigh in on energy crisis

The leading Republican candidate in the recall race, movie star and political neophyte Arnold Schwarzenegger, has been touching on the hot-button issue, without providing many details on what he would do about it.

"We have to think about the infrastructure," the former body builder told CNN's Larry King. "What are we doing about electricity, so we don't have another blackout?"

Republican U.S. Rep. Darrell Issa helped finance the petition drive for the Davis recall with more than $1 million of his own money.
Republican U.S. Rep. Darrell Issa helped finance the petition drive for the Davis recall with more than $1 million of his own money.

Schwarzenegger's chief GOP opponent, state Sen. Tom McClintock, has promised to work toward voiding California's billion-dollar energy contracts that were signed to resolve the crisis.

"Those contracts were negotiated under a clear legal conflict of interest by Davis' chief negotiator," McClintock said in a statement on his Web site. "This governor won't stipulate to these simple facts because it would require him to admit wrongdoing."

Lt. Gov. Cruz Bustamante, the leading Democratic candidate to replace Davis if he is recalled, says he already has been fighting to lower energy costs.

The Bustamante campaign Web site describes his efforts to sue out-of-state power generators for alleged price gouging and allegedly conspiring to manipulate California's electricity market.

During a September 24 debate among the major candidates, Green Party gubernatorial hopeful Peter Camejo blamed the crisis on energy wholesalers.

"You know what we should have done during the energy crisis with these corporations?" Camejo asked. "Voted out all their boards and put law abiding citizens in there and stop them in their tracks."

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