Energy was a huge issue because of OPEC’s steep increases in the price of oil, which raised prices for everything else, too. In this area, we had good policy and better politics, though I still made some powerful enemies. I got the legislature to upgrade the Arkansas Energy Office to a cabinet-level department and attempted to build a broad coalition of ratepayers, utilities, businesses, and government to save ratepayers money; give utilities, businesses, and homeowners incentives to promote conservation; and help develop new sources of clean energy. I thought we could become more selfsufficient and a national leader in both conservation and alternative fuels. We passed legislation allowing tax deductions for energy conservation and renewable energy expenditures for residential, commercial, and industrial use, and exempted mixed fuels that were at least 10 percent alcohol from the state gas tax. We provided energy audits to industrial and commercial businesses and gave 50 percent matching grants to schools, hospitals, and other public institutions for the purchase and installation of energy conservation programs. The federal government provided funds for such initiatives, and we were the first state in the country to get them. When I took office, according to federal government statistics our energy conservation program was the worst in the country. After a year, we ranked ninth overall and third in industrial conservation.
Our efforts at utility regulation were mostly successful but much more controversial. I wanted the Energy Department to be able to intervene in the Public Service Commission’s rate hearings and to be able to get information on, and inspect, nuclear power facilities. The legislature, prodded by its senior member, Max Howell, who was liberal on education and taxes but close to the utilities, watered down my first request and refused to fund the second. When I persuaded Arkansas Power and Light to offer interest-free conservation loans to its customers and charge the cost of making them to the ratepayers, everyone who understood the issue applauded, knowing it was a far cheaper way of increasing energy availability than building new power plants. Unfortunately, a number of legislators, who thought conservation amounted to subversion of the free-enterprise system, raised so much hell that AP&L felt compelled to shelve the program. The utility did continue to support our extensive efforts to weatherize the homes of low-income people, which made them cooler in the summer and warmer in the winter, and cut their utility bills considerably.
Alas, even our conservation efforts didn’t escape controversy. An investigative reporter discovered that one of the projects we funded was a boondoggle. It was designed to train low-income people to chop wood and distribute it to other poor people to burn in their stoves. The Special Alternative Wood Energy Resources project had a descriptive acronym, SAWER, but a lousy record. It had spent $62,000 to train six woodchoppers and cut three cords of wood. I fired the director and got someone else who fixed the program, but it was the waste that stuck in the public’s mind. To most Arkansans, $62,000 was a lot of money.
On the regulatory front, we were outgunned on two big issues. First, we did our best to stop what was called “pancaking” by utilities. If they asked for a 10 percent rate increase and got only 5 percent, they could collect the 10 percent while they appealed the decision in court. Meanwhile, they could file for another rate increase and do it all over again, thus pancaking unapproved rates on top of one another. Even if the utilities lost their appeals, which they usually did, the effect of the pancaking was to force ratepayers, including many poor people, to give them massive low-interest loans. It was wrong, but once again the utilities had more swat with the legislature than I did, killing the anti-pancaking bill in committee.
Second, I continued to fight with AP&L and its parent, Middle South Utilities, over the plan to make Arkansas ratepayers foot the bill for 35 percent of the Grand Gulf nuclear plants in Mississippi, while AP&L proposed to build six coal-fired plants in Arkansas, and demand for electricity in our state was declining so much that AP&L was planning to sell electricity from one of its existing plants to out-ofstate users. Under the law, utilities were entitled to a profit, euphemistically called a “rate of return,” on all their expenses. And under the Grand Gulf plan, Arkansas ratepayers would have to pay for more than a third of the construction costs, plus the rate of return, even if they never used any of the power. AP&L had no ownership in the plant; it belonged to an independent subsidiary with no ratepayers, and its construction and financing plan had to be approved only by the federal government, which subjected the project to far less than adequate scrutiny. When these facts were published in the Arkansas Gazette they caused a firestorm of protest. AP&L was urged to pull out of Grand Gulf by the chairman of the Public Service Commission. We organized a massive postcard campaign to the Federal Energy Regulatory Commission, urging it to reverse the Grand Gulf decision and give Arkansas relief. All to no avail. The Grand Gulf arrangement was eventually upheld by the District of Columbia Court of Appeals, which had jurisdiction over cases involving federal regulatory agencies. The opinion was written by Judge Robert Bork, my old Constitutional Law professor. Just as he had been at Yale, he was all for states’ rights when it came to restrictions on individual liberty. On the other hand, when big business was involved, he thought the federal government should have the final say and protect business from meddlesome state efforts to look out for ordinary citizens. In 1987, in testimony I researched and wrote myself for the Senate Judiciary Committee, Bork’s decision in the Grand Gulf case was one of the grounds I cited for opposing his nomination to the U.S. Supreme Court. I worked hard on an energy plan against stiff opposition, but I had made a powerful adversary in AP&L, which had offices in most counties. And I wasn’t through making enemies. I was upset by what I thought were excessive clear-cutting practices by some of our timber companies and appointed Steve Smith to head a task force to look into it. Steve was still in his firebrand phase. He scared the timber folks and made them mad. All I wanted the clear-cutters to do was to reduce the size of their big cuts and leave adequate buffers along roads and streams to reduce soil erosion. My loudest critics claimed I wanted to put every log hauler and mill worker out of business. We got nowhere, and Steve got disgusted and went home to the hills not long afterward.
I even made some people mad in my economic development work. That’s hard to do. I was determined to broaden the state’s efforts beyond the traditional function of recruiting new industries, to include the expansion of existing industries and aid to small and minority businesses and farmers in marketing their products at home and abroad. We dramatically increased the activity of our state’s European office in Brussels and I took the first Arkansas trade mission to the Far East—to Taiwan, Japan, and Hong Kong. We became the first state in America to have our own program for handling hazardous waste products approved by the federal government. We were also successful in the traditional work of recruiting new industries, with increased investments over previous years of 75 percent in 1979 and 64 percent in 1980. How could I make anybody mad with that record? Because I changed the name of the department, from the Arkansas Industrial Development Commission to the Department of Economic Development, to reflect its new, broader scope of activity. The AIDC, it turned out, was a sacred brand name to many influential businesspeople who had served on the commission and to local chamber of commerce directors all over the state who had worked with the agency. They were not satisfied by my appointment of Jim Dyke, a successful Little Rock businessman, to lead the new department. If I hadn’t changed its name, I could have done all the same things without the adverse fallout. In 1979 and 1980, I seemed to have an affinity for adverse fallout.