Power Woes May Be Widening

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Power Woes May Be Widening

Growing Signs Of Energy Crunch Outside California Bush Assembles Task Force To Develop Response Plan May Lead To Showdown Over Drilling In Arctic Refuge

SAN FRANCISCO and WASHINGTON, Jan. 29, 2001 AP Veneman, Evans, Bush and Abraham discuss the power crunch. (CBS) The effects of California's power crisis are showing signs of spreading — to customers in Arizona, power generators in Oregon, and now, policymakers at the White House.

There, after weeks of calling the Golden State's power woes a "local problem," President George W. Bush called for Vice President Dick Cheney and several Cabinet members to develop a plan for dealing with the energy crunch, reports CBS News Chief Washington Correspondent John Roberts.

Meanwhile, California power regulators extended a stage 3 alert, which made rolling blackouts a possibility, until midnight Tuesday. It was the state's 14th straight day under the highest-level energy alert.

California's utilities are caught in a crunch between soaring fuel prices and a state law that holds down the prices to consumers brought on by a deregulation effort.

Burdened by a combined $12 billion in debt, the utilities' ability to buy and transmit power has been curtailed at a time when natural gas and oil prices have made that power more expensive.

So far, the crisis has been confined to California customers. But, the president said he was calling for action because the crisis appeared to be widening.

Among the signs: A small Arizona utility said its customers will likely see their bills rise by 300 percent next month. The governors of Oregon and Washington are to meet Thursday with top federal energy officials to map out a strategy to ease the strain on the power grid serving the entire western region.

"We're very aware in this administration that the situation in California is beginning to affect neighboring states," said Mr. Bush.

Secretaries Paul O'Neill of Treasury, Don Evans of Commerce, Spencer Abraham of Energy, Ann Veneman of Agriculture, and Norman Mineta of Transportation were seated around the table to work with Cheney.

The president offered no short-term solutions to the West's power woes, instead reiterating his long-held support for drilling in Alaska's pristine Arctic National Wildlife Refuge. Mr. Bush also is considering letting the state roll back its air pollution controls for power plants.

Senate Republicans are expected, possibly next week, to introduce a broad package of energy legislation including approval for oil and gas development in the Alaska refuge. But environmentalists say such a plan will burn out quickly.

"If an energy policy includes Arctic drilling, I think it's dead on arrival in this Congress," Melinda Pierce of the Sierra Club.

However, the president can argue that the entire economy is at risk from high energy prices.

Last week, Federal Reserve Chairman Alan Greenspan told a congressional committee, "If the energy structure of this country is inadequate or in some way excessively costly, it will undermine economic growth in this country, and therefore is a major issue which must be addressed."

Signs of the impact of higher power costs abound, reports CBS News Correspondent John Blackstone. At Salvation Army headquarters in San Francisco, its apparent in the number of phone calls of those who can no longer pay their power bills.

"We're getting a lot more calls now from two-income families, where you just have every penny budgeted, and for your bill to double, it just really throws off your monthly budget," said the Salvation Army's Nancy Udy.

Finding Electricity Elsewhere As electricity gets more scarce and prices for it rise almost exponentially, some companies are finding their own sources of electricity. Also getting a lot of calls is Doug Fernandez, who specializes in making homes more energy efficient.

"The average as of a couple of months ago was in the $125 range," said Fernandez. "Now we're talking about going from that to about $300 and higher in some cases."

The problem has prompted Mr. Bush to extend Clinton administration directives that force outside power suppliers to keep shipping electricity to California's debt-ridden utilities. But the Bush administration policy makers have said that the Golden State must soon take the lead in relieving the power crunch.

"They should expect no more help from the White House," Mr. Bush's top economic adviser, Larry Lindsey, said Sunday on CBS News' Face the Nation.

California Gov. Gray Davis and state lawmakers are working on ways to use public funds to bail out the utilities in a deal under which ratepayers would get an equity stake in the companies. Nonetheless, Lindey's position angers some consumer advocates.

"President Bush and his peers who are free market ideologues have to decide whether they're willing to let California go dark in order to preserve the principle of free markets," said Harvey Rosenfield, president of the Santa Monica-based Foundation for Taxpayer and Consumer Rights.

http://cbsnews.com/now/story/0,1597,221065-412,00.shtml

-- Martin Thompson (mthom1927@aol.com), January 29, 2001

Answers

To characterize George W. Bush and his peers as free market ideologues is laughable. To imply that the debacle in California is the result of a free market in energy is either ignorance of the situation or purposely misleading. Capping the retail price of a commodity while allowing the wholesale price to seek its level does not fit the generally accepted meaning of a free market. Rather, it is a recipe for disaster.

-- Warren Ketler (wrkttl@earthlink.net), January 30, 2001.

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