Electric shock

Critics call a massive new energy bill a scam -- and they say Attorney General Scott Harshbarger is to blame

Talking Politics by Michael Crowley

Here's a quick quiz. A sweeping, multibillion-dollar bill restructuring Massachusetts's electric-power industry that zoomed through the state legislature this week was:

a) "One of the most sophisticated robberies ever designed."
b) "The stealth issue to end all stealth issues."
c) "Power politics at its finest."
d) "A massive bailout."
e) "A fucking giveaway."

Trick question. The answer, according to a throng of outraged public-interest activists, environmentalists, and state politicians, is all of the above.

It's been a troubling -- and telling -- couple of weeks on Beacon Hill. In a rush to clear their dockets before a winter recess that began on Wednesday, legislators have been cranking out one massive bill after another that neither they nor the public have had a reasonable amount of time to consider.

Case in point: this week's electric-utility deregulation. In just a day each of consideration, the House and Senate voted on more than 200 amendments to a hundred-plus-page bill, which at press time was on the verge of winning final approval -- despite the fact that several members knew little more than the very basics of what they had voted on.

The plan's horrified critics could only shake their heads in astonishment at the legislative beast -- and the power of swarming lobbyists -- and mourn what Ralph Nader recently warned could be "the biggest consumer rip-off in state history."

The plan, they say, is hostile to the environment and filled with little-understood loopholes. But worst of all, they charge, it shunts onto consumers some $12 billion dollars in bad investments made by the utilities -- including billions spent building nuclear power plants that the public actively opposed. The total cost of those "stranded costs" to an average household, critics say, could total as much as $3000 over seven years.

A done deal in the legislature, deregulation may yet have repercussions in the 1998 governor's race. It was Attorney General Scott Harshbarger, who as the state's top regulatory official, negotiated a 1996 deal with the utilities that served as a blueprint for the final bill. Harshbarger is running for governor -- and already there are signs that that deal could become a campaign liability.

It may be, however, that such a complicated issue simply won't catch on with the public -- especially if the media keeps snoozing. When Beacon Hill debates $50 million for the Patriots or the symbolism of the death penalty, people go wild. But somehow a law affecting our light switches and our monthly electric bills slips by unnoticed, buried in dry business-section pages. Apparently, a $12 billion tab can't compete for our attention with a sobbing British nanny.

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One man did try his best to wake up the public: Cambridge activist and entrepreneur John O'Connor.

Hoping to stir a deregulation debate, O'Connor spent more than $100,000 for ads in the Boston Globe and the Boston Herald, and on drive-time talk radio. One radio campaign included Ralph Nader; the other teamed liberal crusader Jim Braude and conservative populist Barbara Anderson.

Little-known outside of progressive circles, O'Connor's passionate, well-financed activism has long made him an influential local figure -- and a colorful one: tall, burly, and restless, O'Connor, 42, is a lively combination of a 1970s political idealist and a freewheeling, joke-cracking jock.

THE FUN IS IN THE FIGHT reads a framed slogan in O'Connor's office. But his mission is deadly serious. He grew up in the Connecticut industrial town of Stratford, where an asbestos company called Raybestos was a community anchor-- O'Connor even played Little League baseball for the Raybestos Cardinals. Years later, he learned that Raybestos was responsible for the cancer that killed some of his boyhood friends, that the company hid the dangers of its product, and that the Cardinals' had played baseball above a toxic dump site.

That, O'Connor says, "really shattered my world-view." He went on to found a national grassroots coalition that played a key role in Congress's historic 1986 "Superfund" environmental-cleanup legislation. (Today, the old Raybestos Cardinals ballpark is a major Superfund site.)

Now O'Connor is the president of Greenworks, a Kendall Square-area outfit that he describes as "an incubator" for green-friendly businesses. From a small fortune made in real estate and at Greenworks, O'Connor supports a variety of good works around town has become a strong presence on the local political scene. He even kicked around the idea of a run for Congress this spring.

But on no issue in Massachusetts politics has O'Connor been so active and visible as energy deregulation. With his long-time interest in environmental -- and, by extension, energy -- issues, O'Connor could not resist getting involved in what he saw as a failure of the political system.

"The whole promise of deregulation was cleaner and cheaper energy," O'Connor says. But the plan he saw emerging from Harshbarger's office and subsequently the legislature looked like a sell out.

The basic idea was appealing: make the state's outdated electric power system more efficient by introducing competition into what is now a monopoly industry. (In a few months, you'll be able to choose your utility company the way you pick a long-distance phone service.) The new market pressures should allow utilities to lower rates for consumers while turning bigger profits and spewing less pollution.

Sounds great, especially considering that electric rates in Massachusetts are about 50 percent higher than the national average, and the state's power plants are among the nation's dirtiest.

But in making the transition, someone will have to swallow billions of dollars invested in power plants and contracts that won't survive the pressures of the new market. Those "stranded costs" total some $12 billion. Under the deal brokered by Harshbarger and passed by the legislature, consumers will pay those stranded costs by way of their utility bills.

O'Connor says the utilities should swallow all $12 billion in stranded costs; other critics suggest a 50-50 split of the burden. At the very least, they say, utilities should only be able to pass along the costs for investments they were forced into by the state -- and not those, like nuclear power plants -- they made despite strong public protest. What's more, critics say, the plan woefully fails to place tough new limits on air pollution, and actually cuts funds for conservation and renewable-energy research.

Harshbarger and legislative backers of the plan say they won the best deal possible without sending the utilities into bankruptcy or tying up the courts for eons. Harshbarger professes amazement that anyone could complain about his deal, which promised a 10 percent cut in electric rates almost immediately. (The House and Senate were still haggling over the exact reduction at press time.) He also notes that utilities already bill customers for their bad investments.

Critics say the bankruptcy threat is exaggerated, and that they'd prefer to fight in court than cave in. And, they add, a 10 percent cut is fine -- until you consider that those failed investments will make up 30 to 40 percent of your bill.

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John O'Connor says the real blame here lies with Scott Harshbarger.

"I can only imagine he made a political decision about his coming contest with Joe Kennedy," says O'Connor. "I think he made the calculation that even though he was going to pay well-to-do shareholders billions of dollars, in an election year he could promise voters a 10 percent rate reduction."

What's more, O'Connor charges, "He needed every level of support and institutional dollar he could get his hands on."

The notion that Harshbarger bungled deregulation could pose a real threat to him in the '98 campaign -- a fact apparently not lost on his opponents.

Last week State Treasurer Joe Malone, a GOP candidate for governor, blasted the deregulation deal at a State House press conference. Former state senator and Democratic gubernatorial candidate Patricia McGovern weighed in with a proposed "Consumer's Electric Bill of Rights." And according to one knowledgeable source, Ray Flynn, the former Boston mayor who is weighing a populist-style challenge to Harshbarger, was recently on the verge of broadsiding the attorney general on the issue -- but held off in deference to his union supporters, who won sweet deals in the current deregulation plan.

Harshbarger seems to realize that things could get ugly. After Malone's criticisms, he responded in an unusually pointed statement (and later in a Globe editorial) accusing his critics of using "misinformation, if not outright lies," as well as "phony populism, political pandering, and `sky is falling' rhetoric" -- even though Malone never singled out Harshbarger by name.

"I have never seen Scott use language like [that]," says Jim Braude. "I'm convinced that he realized he was well-intentioned and screwed up along the way."

O'Connor is more blunt: "He should be man enough to admit his staff made a bad deal."

This is one of those times when Scott Harshbarger must be grateful that Joe Kennedy stayed out of the governor's race. Kennedy, who founded an energy company in the 1980s, was clearly prepared to make deregulation a campaign issue.

"We saw it as a key crack issue," says one Kennedy backer.

There may also be an opportunity here for a broader attack on Harshbarger's dealmaking. Twice before as attorney general, he has been forced to defend his bargaining with big corporate interests.

Harshbarger was an architect of a $368 billion settlement between several states and the country's tobacco giants last June that has drawn withering fire from tough anti-tobacco critics who said it was far too soft on the industry. And in 1994, he broke a vow to make nonprofit Massachusetts hospitals justify their tax-exempt status by meeting specific dollar targets for spending on community programs.

Could all this mean trouble for Harshbarger in the '98 campaign? According to the polls, he's already having a hard time winning over voters, even in his own party. He doesn't need new questions about his negotiating savvy, or his dedication to protecting the little guy against corporate musclemen.

And he definitely doesn't need people concluding they were screwed by energy deregulation. It may not be sexy -- but neither are the tax-policy debates that have driven Massachusetts politics for a decade. If anyone successfully translates deregulation into a pocketbook issue, it could explode in Harshbarger's face.

And who could do such a thing? John O'Connor, who is already talking repeal: "The citizens of the Commonwealth lost round one," he says. "But there's going to be a round two and three."

Michael Crowley can be reached at mcrowley[a]phx.com.