Congress At a Loss Over What to Do About California's Energy Problem Thursday, February 01, 2001

By RYAN ALESSI Scripps Howard News Service

WASHINGTON -- Even as California legislators hammer out their plans to stop the state's electricity hemorrhage, the Senate began trying to figure out where the federal government fits into the solution. But in a hearing, Wednesday, senators mostly grumbled about how the problems are hampering their own states.

Members of the Senate Energy and Natural Resources Committee probed energy analysts and industry representatives on whether the federal government can help clean up a messy West Coast energy shortage that several witnesses testified can only get worse.

"This is not a matter of shutting off all the swimming pool pumps in California," said Larry Makovich, a senior researcher at Cambridge Energy Research Associates. "I think you have to do something right now _ both on the demand side and the supply side _ because we have a crisis looming this summer."

Nearly all of the 16 energy witnesses expressed fear of a more severe energy shortage this summer. The state has been crippled by scant electricity supply for most of December and January. But, as one executive pointed out, that comes at a time when energy demand is only at 65 percent. Once air conditioners start kicking in, demand will increase, putting California between 2,000 and 5,000 megawatts short this summer.

The experts suggested a few steps the federal government could take, including encouraging price caps on wholesale electricity, relaxing environmental standards for building power plants and increasing funds for conservation and efficiency programs.

Senators focused most of their questions on the merits of a temporary cap on wholesale electricity prices. Congress could order the Federal Energy Regulatory Commission to set the price, which would be the absolute highest a generator could charge a utility for electricity. The commission sets all rules related to the wholesale energy market.

Sen. Dianne Feinstein, D-Calif., introduced a bill earlier this month that, if passed, would essentially force the commission to set those price caps. Though, in December, the commission deemed the prices in California "unreasonable and unfair" it has balked at telling the market what to do.

Many senators were at a loss for solutions. And testimony in Wednesday's hearing did little to clarify the situation.

Analysts were split over using price caps to improve California's situation. And those who endorsed the caps did so reluctantly and stressed caution.

"They are a last resort," said Peter Fox-Penner, an energy analyst with the Brattle Group in Washington, D.C.

On the other hand, energy generators said California's stringent environmental regulations make it nearly impossible to build power plants. Keith Bailey, chairman of the Williams Companies, an electricity generator, said plants can be built in other states in less than 10 months but it takes between five and seven years in California.

Most senators seemed to suggest that the regulations were a California problem, and Congress would be reluctant to alter provisions in the Clean Air Act just to allow more power plants to be built in the West.

The hearing also revealed tension among lawmakers, especially those from western states. Some senators offered their help in easing the energy crunch that is not only draining power from the rest of the region but also draining water from hydroelectric reservoirs throughout the Northwest.

"We're all going to get pushed into this," said Sen. Ben Nighthorse Campbell, R-Colo. "We all have a vested interest to stem that downward spiral."

Others vented their frustration that one state's problems will infect energy bills and economies across the region.

"The brownouts of California now could be the brownouts of Idaho, Oregon and Washington next summer," said Sen. Larry Craig, R-Idaho. "We will work in the short term to solve their problems, but if the solutions don't work, we will get less supportive and a good deal more angry."

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-- Martin Thompson (mthom1927@aol.com), February 01, 2001