San Diego Union-Tribune

April 23, 2001

A-1

Free-marketer to lobby U.S. for price controls
   Gov. Davis hands ex-senator hard job

By TOBY ECKERT 
COPLEY NEWS SERVICE 

WASHINGTON -- J. Bennett Johnston has one of the toughest lobbying jobs in town: convincing federal officials that electricity price controls will calm the power crisis roiling California.

Johnston, a courtly former Democratic senator from Louisiana with close ties to the energy industry, has been hired by Gov. Gray Davis to advise him on energy issues and to work the unfriendly terrain of the Federal Energy Regulatory Commission, the White House and Congress, where top officials have been adamant in their opposition to wholesale price limits.

Despite the long odds, Johnston insists temporary price controls are politically inevitable given the mounting problems in the West and the prospect of widespread blackouts this summer.

"I confidently predict that the administration will have to act, and I may be the only one who believes that," Johnston said in a subtle Southern drawl. "I've been around this town a long time, been around energy a long time, and I think I can see this one coming."

Of course, California is paying him $25,000 to pave the way, so Johnston has to be an optimist.

Davis is pushing for "cost-plus" pricing, which would base the price of wholesale electricity on the cost of producing it, plus a set profit margin. New generating plants and long-term contracts negotiated by the state could be exempt from the limits, Johnston said.

It seems an unlikely role for the 68-year-old Shreveport native. During his 24 years representing oil-rich Louisiana in the Senate, Johnston was a champion of deregulating energy markets and lifting price controls, a philosophy he helped steer into several laws as chairman of the Senate Energy Committee.

After retiring from the Senate in 1996 and setting up shop as a lobbyist, he attracted a host of energy-sector clients, including powerful foes of price controls such as Enron, a Houston-based electricity marketer. He serves on the board of oil giant Chevron, which named a 309,000-ton tanker after him, a distinction he shares with President Bush's national security adviser, Condoleezza Rice.

But Johnston sees no contradictions between his free-market beliefs and the job Davis has assigned him.

"I probably have more battle stripes fighting for competitive markets than anybody in the country," he said, reeling off a list of deregulation measures he helped shepherd into law. "Nobody has as much invested in competition as I, and I continue to believe in it.

"But one thing that is always a necessary element in competition is you have to have a competitive market, where there is some balance between supply and demand."

And that is not the case in California.

"There's never been a transfer of wealth like this, from the utilities to the generators, in the history of modern American utility law," Johnston said.

Michael Shames, a consumer activist from San Diego, is critical of the ease with which former lawmakers such as Johnston step through the revolving door to Washington lobbying. Yet Shames, who heads the Utility Consumers' Action Network, is not surprised Davis hired Johnston.

"He has access to people at FERC and in the White House," Shames said.

Johnston served on a team of energy advisers to the Bush administration during the presidential transition and was on the short list for energy secretary. In fact, Johnston says he was offered the job, but turned it down because it would have meant more time away from his wife, Mary.

"I realized I was in elective public office for 32 years, and always everything took second fiddle to my political career," he said. "And I thought this was just a bit much to ask."

A power industry official, speaking on condition of anonymity, said Johnston is highly regarded as an expert on energy issues and his record as an advocate of deregulation may carry weight with foes of price controls.

But the official said that, as a Democrat, Johnston would be handicapped in lobbying a Republican White House and Congress.

Others who know Johnston dismissed that analysis.

"In the South, particularly in Louisiana, most politicians have to get along with a little bit of everybody," said former Republican Rep. Bob Livingston of Louisiana. "I don't think Bennett has any difficulties."

"The fact that he was under active consideration by the Bush administration for the position of energy secretary shows that people of both parties like him," said Polly Gault, vice president of Edison International, the parent company of Southern California Edison, which is a Johnston client. "He's not partisan and he never was. And there's a great deal of respect for his expertise on energy policy."

Johnston had a reputation as a pragmatist in the Senate, someone willing to cut deals with the opposition to achieve his larger goals. For instance, in guiding a major energy bill through the chamber in 1991, he dropped controversial provisions that would have opened Alaska's Arctic National Wildlife Refuge to oil drilling and raised automobile gas mileage standards. With that, he succeeded in ending '70s-era regulations on oil and natural gas, according to the Almanac of American Politics.

Judging from the rhetoric coming from FERC, the White House and Congress, Johnston will have to use all his political acumen to get the powers that be to look more favorably on electricity price controls.

"Price caps don't work," said Rep. Joe Barton, R-Texas, who chairs a key Energy subcommittee. "Price caps aren't going to get you more supply. Price caps are a political expedient that can hold down the price until the next election."

Of course, this town is all about political expedients and the next election.

With consumer electricity rates rising in many parts of the West and blackouts looming in California and perhaps other states, Johnston thinks the pressure for federal price controls will become too strong to resist.

"At some point," he predicted, "the voters all over the West are going to say: 'Eureka! You mean the federal government can do something about this and they are not?' This is the kind of thing that can swing a lot of congressional seats."