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Solution is still in dark

A U.S. Senate committee can only agree it will get worse.

By David Whitney Bee Washington Bureau

(Published February 1, 2001) WASHINGTON -- Congress took its first tentative steps into California's electricity morass Wednesday as a Senate panel heard appeals for regional wholesale price caps and relaxation of federal rules to speed construction of power plants and allow dirty old ones to operate.

But about the only consensus that seemed to be developing during the five-hour Senate Energy and Natural Resources Committee hearing was that the power squeeze facing California and the West Coast will worsen throughout the summer regardless of what happens in Washington, Sacramento or the trading rooms where electricity is bought and sold.

"There's a very high probability that the West Coast will face blackouts this summer," said Judi Johansen, vice president of PacifiCorp of Portland, Ore., which produces and markets power throughout the Pacific Northwest. _____Related links _____

Find articles and resources in The Bee's California Power Crisis special section Send your power questions and Assembly Member Mike Briggs will answer them during a live chat at 1 p.m. Feb. 1 Some Republicans firmly backed the new administration's relatively hands-off approach and its focus on what they called a long-term energy policy.

Sen. Frank Murkowski, an Alaska Republican who is chairman of the Senate energy committee, argued that a Clinton administration order forcing power producers and natural gas companies to sell supplies to California -- an order the Bush administration temporarily extended last week -- potentially made the federal government liable for billions of dollars in debt incurred by California utilities.

"In the event California cannot repay generators for this power, the federal government is going to have to meet that obligation, because this was an order of the federal government," Murkowski said.

Wednesday's hearing, a prelude to the Western Governors Association meeting on the power crisis today in Portland, was billed as an inquiry into the California situation and its implications for the West.

What it revealed were sharp differences between the states, between utilities and between senators on what to do about it.

At one point, Sen. Dianne Feinstein, D-Calif., delivered an impassioned appeal to power generators to quit "gouging" on prices.

"When my people tell me the price at 3 a.m. is 500 times higher than ordinary, that to me is price gouging," Feinstein said. "If we could just get a little cooperation from out-of-state generators. Please be fair."

The power to regulate prices on interstate sales of electricity belongs to the Federal Energy Regulatory Commission, a low-profile independent agency. The commission has shown little inclination to impose a regional price cap, but critics have urged Congress to force it to take action.

Several Democrats, including Feinstein and Sen. Barbara Boxer, also of California, backed price caps at Wednesday's hearing.

Feinstein cited a study predicting that her state's power problems only would increase this summer and that caps were needed to keep the state's two main utilities solvent and the lights on in the nation's most populous state.

Feinstein was joined in the call by California utility executives. Fred John, senior vice president for Sempra Energy, the parent company of San Diego Gas and Electric, said his company long had opposed price caps. But, he said, "You reach a point where enough is enough."

But minutes earlier, when Oregon Sen. Gordon Smith had his turn, he said it was his constituents who were bearing the brunt of a California-caused problem.

"Oregonians are being notified that rates are going up 10, 30 and 40%," the Republican lawmaker said. "I don't think that's fair when California rates are capped at 10%. I think that stinks."

For most of the hearing, two national energy experts and a Wall Street investor debated whether California's grand experiment with electricity deregulation was crafted so badly that it created the power problem or whether power shortages revealed the flaws in the state's regulation plan.

"The biggest problem in California is that no one can agree on what went wrong," said Larry Makovich of Cambridge Energy Research Associates in Massachusetts. The way he saw it, California wrote a bad deregulation law that couldn't keep up with rising power demands.

Power generators agreed that there needs to be more power production immediately.

Where they want federal help is streamlining the permitting process so that it doesn't take four or five years to jump through all the bureaucratic hoops to get a plant located and built.

The New York Times contributed to this report.,1737,235220.html,00.html

-- Martin Thompson (, February 01, 2001

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