Despite moves by the Republican-led FERC during the past week toaddress potential refunds and possible price manipulation in theCalifornia wholesale power markets, the Bush administrationcontinued to be the favorite whipping boy of Senate Democrats forits unrelenting opposition to temporary price mitigation in thewestern region.
Appearing at a hearing of the Senate Energy and NaturalResources Committee last Thursday, Energy Secretary Spencer Abrahamtook the brunt of the criticism from senators — mostly Democrats— for the Bush White House’s inaction on restraining runawayprices in western bulk power markets.
While the administration is neither “insensitive” nor “uncaring”to the public’s concern over electricity prices, Abraham testifiedrepeatedly that its first priority was increasing power supply sothat the lights can stay on next summer. The hearing was called toconsider three bills by Sens. Dianne Feinstein (D-CA) and BarbaraBoxer (D-CA) to enact prices controls or mitigation in the troubledwestern regional markets.
“To me, our first priority to the American people is to ensurethere’s a reliable supply of energy this summer,” Abraham saidunder questioning from lawmakers. Price caps would only serve to”seriously aggravate the supply situation” by discouraginginvestment in new generation facilities, at a time when they’reneeded the most.
“I’m surprised by the ideological hardness of your statement,”countered Feinstein. “I agree that [California] has to fix thebrokenness [in its markets] on its own” by boosting generatingcapacity within the state. But that’s a long-term solution, shenoted. “My question is what do we do right now They’re going to becharging $5,000 a megawatt this summer. We’re sending a signal thatit’s okay” to charge that amount in California.
FERC’s recent action, targeting 13 California power suppliersfor potential refunds, is evidence that this won’t happen, Abrahamsaid. “That’s the way to address prices that are unjust” andexcessive, he told Feinstein. Sen. Jeff Bingaman (D-NM) sharplycriticized the Commission’s actions so far, including the refundorders, calling them at best “half-hearted” attempts to correct themarket.
California’s Gov. Gray Davis is looking to the federalgovernment for help to create price stability, Feinstein pressedfurther. “I’m not suggesting that high prices are a good thing,”responded Abraham, but preventing blackouts this summer is theWhite House’s top priority. The Bush administration, he said,doesn’t want to have to tell the public that the good news is FERCordered price caps, but the bad news is “you’re not going to havepower” this summer.
“I think we need to increase our [federal government’s] effortsto help” California, said Sen. Gordon Smith (R-OR), in offeringsupport to Feinstein. “I think we need to give you [DOE] moreauthority, and you need to use it to mitigate a catastrophe.”
That’s what the White House is trying to do, Abraham said. Itsimmediate, primary goal is to “deal with the summer crisis” so thatbusinesses in the West don’t have to shut down due to a lack ofelectricity.
Despite the administration’s focus on increasing power supply,”I can’t tell you…..that we’re at a point where we can guaranteethere will be no blackouts” this summer, the DOE secretary toldCommittee Chairman Frank Murkowski (R-AK). “I don’t want to makeany assertions that there will be no rolling blackouts…”
Oregon Gov. Gary Locke included himself among the expandinggroup of proponents of price caps. FERC has taken “cautiousactions” so far that have provided no relief to Northwest states,he said, in calling for caps in the short term. “We simply need atime out” to allow Northwest states to protect their economies andthe California market to correct itself, Locke noted.
While Locke applauded the Bush administration’s efforts topromote more energy development, he said, “we in the West cannotwait seven years until new [energy] resources [are] discovered andtapped.”
Murkowski wasted no time in voicing his opposition to the threeFeinstein-Boxer bills — they “do not fix the supply problem inCalifornia” — as well as his lack of compassion for the state’ssituation. The state’s average monthly electric bill — which is$58.70 — is lower than the bills in many other states, he said,and the state is “dead last” in the nation in terms of generationcapacity per person.
©Copyright 2001 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.
© 2021 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 1532-1266 |