ANALYSIS: Public Affairs - PR battle rages amid California power crisis - California's energy crisis proves that gaining the public's trust is not just about getting media to cover key messages. Aimee Grove reports on PR for skeptics

California's escalating energy crisis, which reached emergency proportions last week as shortages forced statewide rolling blackouts and the two biggest utilities edged toward bankruptcy, has plunged a host of different parties into a PR war likely to leave few unscathed.

California's escalating energy crisis, which reached emergency proportions last week as shortages forced statewide rolling blackouts and the two biggest utilities edged toward bankruptcy, has plunged a host of different parties into a PR war likely to leave few unscathed.

California's escalating energy crisis, which reached emergency proportions last week as shortages forced statewide rolling blackouts and the two biggest utilities edged toward bankruptcy, has plunged a host of different parties into a PR war likely to leave few unscathed.

Arguably, it is Pacific Gas & Electric (PG&E) and Southern California Edison (SCE) who have the toughest PR battles before them. Both have been caught in a price squeeze between legally capped consumer energy prices and the nonregulated, and therefore skyrocketing, wholesale prices they have had to pay outside power generating companies. Because of the price discrepancy, and an inability to pass costs to customers, PG&E and SCE claim to have lost more than dollars 11 billion.

From a pure PR standpoint, the utilities face a three-fold challenge: informing consumers (mainly via media reports) about the reasons behind the shortages and the need for conservation; emphasizing the severity and cause of their financial problems; and maintaining public support, even as rates are set to go through the roof.

According to SCE VP of corporate communications Clarence Brown, efforts to bring media up-to-speed on the situation have not been easy.

'This called for simplifying a highly complex issue and educating reporters new to this once-sleepy beat about who the players are and how to talk about us,' explains Brown. 'For example, making sure that they know the difference between the generator companies and the utilities, and not just lumping us all together as 'power companies.''

Brown also notes that employee communications has been nearly as important as media relations in telling SCE's side of the story. 'Even our meter readers had to be trained on key messages because they are constantly being asked, 'What's going on?''

Neither PG&E nor its parent company would comment on their ongoing PR efforts and future plans. However, a section of PG&E's corporate Web site contains relevant documents, statements, news stories and links to pertinent organizations. In addition, a source close to the two parties said that PG&E had hired Solem Associates, a San Francisco-based agency specializing in issues management and crisis work, to assist the internal team. Neither agency nor client could be reached to confirm the relationship.

Both utilities' PR message has been to blame out-of-state energy generators for driving prices up and to portray themselves as helpless victims in an unfortunate situation. However, despite what seems like fairly balanced coverage by local media, many Californians are not buying the story.

According to a January 7 Los Angeles Times poll, 54% of state residents said they 'do not believe' that an energy shortage really existed, and nearly 40% said they 'strongly disapproved' of the state's utilities.

Worse, a poll by The Field Institute released last week found that 57% of Californians surveyed said the shortage was really an attempt by the utilities to raise rates, rather than an emergency caused by declining energy supplies.

'I think they have done a good job of telling their story, but the bottom line is that the public is still confused, and the only message that comes through to them is that electricity bills are going up,' says San Francisco crisis communications consultant Sam Singer. 'They might need to resort to advertising at this point.'

Issues management expert Robert Heath, a professor of communications at the University of Houston, believes PG&E and SCE were hurt by a lack of early consumer education efforts about the risks inherent in deregulation.

'This issue didn't just drop out of the sky. It has evolved over the past four years. They either began to communicate with the public much too late or were very ineffective in their early efforts,' says Heath.

'They needed to lay a good foundation rather than simply reinforce the simplistic message carried by the media - that deregulation would automatically lead to lower prices for consumers.'



Power generators fight back

The energy generator companies also have had their share of communications challenges. Chronic energy shortages and soaring electricity rates have led to billions in profits for these companies - most of which are headquartered out of state. Combating accusations of price gouging and deceptive or unfair practices has sent the communications efforts of companies such as Reliant Energy and Mirant (formerly known as Southern Energy) into overdrive.

'We have been placed in the difficult position of trying to preach the solution - construction of new power plants and conservation - while people are calling us Satan,' quips Mirant communications director Chuck Griffin, who says his media relations team has been answering reporter calls from 7am to 10pm every day for the past several weeks.

Griffin says his department, which brought in San Francisco's GCI Kamer to assist with the crisis and is currently seeking a Sacramento firm, has spent the majority of time simply refuting accusations from the governor's office and the utilities that Mirant, along with fellow energy generators, have been holding back power production to drive up prices.

'It's simply a matter of emphasizing that this is a basic issue of supply and demand, and repeating our key message: this is a problem caused by a lack of power plants in California,' he explains.

Finally, unless lawmakers can devise a solution that would both lessen the energy supply problems and keep PG&E and SCE solvent, Gov. Davis' image is likely to suffer. Despite his efforts to solve the problem - most recently by signing an emergency bill to free up dollars 400 million in state funds to buy power on the open market and sell it to the utilities - Californians remain frustrated. A statewide survey by the Public Policy Institute of California revealed that 62% disapprove of the way the governor is handling the situation.

What's more, Davis' moves stand to affect the overall state of California's economy. Just this week, the Standard & Poor's issued a credit watch with 'negative implications' about the state's ability to borrow for voter-approved general obligation bonds that finance everything from schools, to parks, to highways. To make matters worse, several leaders from top-performing Silicon Valley companies, such as Intel, have issued statements warning that they would discontinue expansion in California due to uncertainty over energy sources.



No end in sight

This situation may well be far too big for PR alone to handle. Crippled by periodic outages and threatened with sky-high electric bills, California residents are mad at just about everyone now. The most recent Field Institute poll showed that three-quarters of those queried blamed the situation on the state's utility companies, its failure to build new power plants and on the California Public Utilities Commission.

More than 60% pointed the finger at the Federal Energy Regulatory Commission, the California state legislature, activist groups that blocked new plant construction and an increase in industrial energy use. Another 53% blamed former Gov. Pete Wilson.

'This is a quintessential California story, like earthquakes and drought,' says Larry Kamer, head of GCI Group's San Francisco-based public affairs practice. 'It will be with us for a long time.'



Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in