Cheney Rejects Price Caps, Aid for Calif. Power Crisis

By DOYLE MCMANUS, RICHARD SIMON, Times Staff Writers

WASHINGTON--Vice President Dick Cheney said Friday that there is little more the Bush administration can do to alleviate California's energy crisis this year and declared his opposition to further federal intervention in the energy market even if the problem threatens the nation's economy. "It's all you can do in the short term," Cheney said of the modest energy conservation measures President Bush announced earlier this week, such as turning down air conditioners in federal buildings. In an interview with The Times, Cheney, whom Bush has put in charge of designing a new national energy policy, said he strongly believes that energy prices should not be capped or regulated under any circumstances. He said he disagreed with the Federal Energy Regulatory Commission's decision last month to place limits on wholesale electricity prices during emergency shortages. "I'm a skeptic. I've never seen price regulations that I've felt very good about," Cheney said. "If I had been at FERC, I would never had voted for short-term price caps. But that's their decision. . . . I hope for their sake, and California's, it works." FERC, an independent regulatory commission, decided April 25 to cap wholesale prices when statewide electricity reserves fall below 7%, using a formula pegged to the cost of production for the least efficient generating plant. Consumer groups and Democratic members of Congress have criticized the decision as too soft, but Cheney--like other advocates of deregulation--condemned it as a step too far. "Price caps are not a help. They take us in exactly the wrong direction," the vice president said. "The way you address these issues is you either have to reduce demand or increase supply. And anything that doesn't do that is counterproductive, especially if it takes us in the opposite direction, which to some extent price caps may because they discourage investment." "Ultimately, I think we're going to be better off if we have a deregulated energy market in this country," he added. Asked whether he might soften his opposition to price controls if the energy crisis began to produce significant damage to the national economy, Cheney shook his head ruefully. "I start with a strong view, based on prior experience, that government should intervene in the marketplace with great reluctance. "I admit that I was traumatized in my youth by being part of the Nixon wage and price controls," he said with a wry smile. In 1971, when President Nixon sought to tame inflation with federal controls, Cheney was an obscure White House official. "I remember how we started out with 14 pages of regulations . . . which I typed up myself." A few years later, "we had a roomful." More important, Cheney recalled, the Nixon price controls led to a series of "unintended consequences," including a decline in domestic production of oil, increased reliance on foreign energy sources and the failure of the U.S. automobile industry to build fuel-efficient cars. Cheney, speaking in his West Wing office, acknowledged that the administration's tough position against price caps could offend many California voters in the short run, but he said he was confident that Californians would come to accept his position in the long run. "There is a much greater willingness today . . . to have this debate," he said. Cheney said the administration has done "virtually everything" that Gov. Gray Davis has asked, except to impose price controls. "We're doing everything we can. Remember, we've been here 100 days. Our predecessor left this area virtually untouched, I think primarily because it involves very tough issues. It means you've got to go out and address some of the most sensitive political issues . . . and we're doing that. That should have been done years ago. If it had been done years ago, California wouldn't have trouble today." Cheney said the national energy policy manifesto he plans to issue later this month will touch on California--but largely as an example for the rest of the nation to shun, not as a focus for federal action. "We talk about California; there are a lot of examples there in terms of what needs to be done and, to some extent, what to avoid. . . . [But] the things we focus on with respect to policy are long-term in nature and aren't going to provide any relief this summer." Cheney offered a glimpse of his strategy for building political support for a national energy policy that is expected to promote domestic production of oil, gas, coal and nuclear power. Contending that technological advancements have reduced the environmental risks of oil and gas exploration on public lands, he said, "We can, in fact, have both: a clean environment and adequate supplies of energy." While Cheney has been criticized for emphasizing the supply side over energy conservation, he said, "Conservation has a role to play, but it's not sufficient. You cannot build an energy policy just on the notion of conservation. . . . People have used the conservation arguments in order to avoid some of the tough issues associated with increasing supply." Acknowledging that increased reliance on nuclear power--an issue he has embraced--has been a tough sell, Cheney said public attitudes appear to be changing. He said he recently asked a group of moderate lawmakers whether they would be open to construction of new nuclear power plants. "Nearly every hand went up," he said, touting the "environmental values" of nuclear power. Cheney also said that, although he believes that unilateral economic sanctions "rarely work," he understands there are "special problems" in removing sanctions against oil exporters such as Libya and Iran. Bush has said he has no intention at the moment of removing sanctions on Libya and Iran; Cheney said he favors a review of sanctions. The task force report will deal with another controversial proposal: industry efforts to allow federal authorities to exercise the power of eminent domain to obtain rights-of-way for new electrical transmission lines, as they already do for gas pipelines. Cheney would not say whether the task force would recommend that authority. But such a proposal is likely to face opposition from state and local officials.

-- Helium (HeliumAvid@yahoo.com), May 05, 2001

Answers

Same old, same old! The free enterprisers want to free enterprise, and the regulators want to regulate.

-- Billiver (billiver@aol.com), May 05, 2001.

I would like to remind that tinhorn, he was serving in congress when many of these regulations where passed. If daddy Bush and Cheney had been tending the store instead of fighting a war in the middle east, we would have had the time to build those power plants and refineries we need now.

-- David Williams (DAVIDWILL@prodigy.net), May 06, 2001.