Cheney says nothing can be done to ease energy crisis

Vice president blasts state for flawed markets

By H. Josef Hebert The Associated Press May 26th, 2001

WASHINGTON -- Vice President Dick Cheney said Friday that nothing more can be done to help solve California’s power problems this summer.

He criticized the state for not taking steps sooner to fix a flawed electricity market.

"They knew years ago they had a problem," Cheney said at an energy conference for small business. "They postponed taking action because all of the action was potentially unpleasant."

The vice president’s assessment came as Democrats and Republicans in Congress tried to work out a compromise on legislation to bring some relief to California this summer. President Bush plans to visit the state next week and meet with Gov. Gray Davis to discuss the issue.

Big brother help

A group of West Coast Democrats, in a letter to Bush on Friday, urged him to use his trip to California to respond to the Western energy crisis.

It "is a problem that only federal intervention can solve," said the Democrats from California, Oregon and Washington. They urged Bush to call on the Federal Energy Regulatory Commission to impose temporary price controls on wholesale power markets in the West.

Cheney, addressing a U.S. Chamber of Commerce energy conference, said, "The bottom line is there isn’t anything that can be done short-term to produce more kilowatts this summer." He also rejected price controls, saying they have added to the lack of an adequate power supply.

Davis has sharply criticized the Bush administration for opposing temporary price controls to reduce record high wholesale electricity prices across the West.

Cheney said this week’s upheaval in the Senate, with a shift from GOP to Democratic control, "can conceivably have an impact" on getting much of the administration’s long-range energy plan approved.

Still, he said he thinks the administration can make progress on the energy package unveiled last week. He acknowledged it would be easier if Republicans had remained in control of the Senate.

Cheney outlined key points of the energy package before several hundred people, many of them entrepreneurs from across the country, at an energy conference sponsored by the U.S. Chamber of Commerce.

Asked by a Californian what the federal government could do to lower power costs that have gone from $7 billion in 1999 in California to $40 billion over the last 12 months, Cheney reiterated his opposition to price controls.

"We think that’s a mistake," he said, contending that part of California’s energy problem today is the result of price caps put in place a few years ago.

While acknowledging that California’s attempt to deregulate its electricity market had bipartisan support, Cheney suggested that Davis, a Democrat, added to the problem by not seeking retail price hikes sooner. "We’re now in a situation where the prices have to go up anyway," he said.

Initial plan problems

California in 1996 allowed its wholesale electricity markets to be deregulated, but continued controls on retail prices, leaving major utilities unable to pass on their high costs. Only recently have state regulators imposed sharp increases, as high as an 80 percent hike on retail prices.

Democrats in both the House and Senate argue the Western energy markets are broken and rife with manipulation by a small number of energy companies, many of which are based in Texas and support the president.

They maintain price controls can be crafted in such a way as to allow companies to still make substantial profits and increase supplies. They claim generators now are holding back power to force up prices -- allegations denied by the companies.

A bill before the House Energy and Commerce Committee is aimed at bringing some help to California this summer, its sponsors say. But progress on the bill has bogged down over disagreement on the price cap issue.

The legislation cleared a subcommittee May 10 on a 17-13 party-line vote without a provision to cap wholesale electricity prices as Democrats had wanted. Both parties were trying to work out a compromise on price caps Friday, but Democrats said no progress was made.

"We are obviously frustrated," declared House minority leader Richard Gephardt, D-Mo., who accused Republicans of bottling up the legislation in committee.

-- pho (owennos@bigfoot.com), May 26, 2001

Answers

How can they keep saying the generators are holding back power to increase prices? There is no excess power to hold back.

-- Wayward (wayward@webtv.net), May 27, 2001.

I have been a citizen of California since 1980. From 1982 to 1998, I temporarily resided, for purposes of employment, in many parts of the United States. These locales include Florida, Michigan, Indiana, Utah, Kansas, Virginia, Massachussetts, Missouri, and Pennsylvania. From personal knowledge, I can attest that there is widespread and deep rooted stereotypical prejudices concerning California, which are very pervasive in widespead regions of the United States. California is widely scorned as "La La Land", the "Land of Fruits and Nuts", the "Sodom of our time", and so natural disaster prone as to be "about to fall off into the Pacific any day."

Having lived in CA for many years, in between these temporary trips, plus some temporary trips to other parts of CA, I also know from personal knowledge, that the facts are very different. California's economy is tough: Employers can make employees work harder and longer for less pay, and the cost of living is higher relative to wages than most anywhere else. Thus, the vast majority of working Californians don't have much idle time to get into "trouble". Those who do, have very limited time to devote to any controversial or sinful pursuits. Furthermore, Californians are as diverse as I have seen anywhere, ranging from, yes, the so-called "Fruits and Nuts" types; to very conservative family centered Bible thumper types.

Also, I saw ample evidence of the existence of the so-called "Fruits and Nuts" types in other regions of the country, generally regarded as being "conservative". Such evidence took the form of noise- bellowing "Hell's Angels" motorcycle groups, people wearing T-shirts with very controversial slogans, effeminately dressed men, and other similar public evidence.

In addition, I subscribe to the primary remaining "Y2K" mailing list, run by Cory Hamasaki. In these postings, I have seen multiple snide remarks about California, evidencing these prejudicial stereotypes. The fact that these are held even by "Y2K savvy" people shows the intensity and depth of this prejudice, as these people have unusually high intelligence in at least a certain area: Not being prone to the widespread human phenomenon of "Denial" when faced with genuine threats. This does not reflect unfavorably in any way upon Cory Hamasaki, but only upon certain individuals who are members and make postings.

I believe that these pervasive prejudicial stereotypes about California are the foundation of widespread public support for the Federal Government's refusal to take any steps which could avert the insolvency and bankruptcy of California. There is widespread belief, driven by prejudice, that California deserves punishment and hardship.

Yes, there is a "kernel" of technical bottlenecks and shortages of electricity, due to Y2K embedded system problems, just as in petroleum and natural gas. But in these other two areas, prices are moderately higher all over, and everyone is taking their fair share of the moderate "hit", so it isn't a disaster focused on one region. In the case of electricity, a combination of State Government blunders and mismanagement, synergizing with the Federal power structure, is enabling the electricity Y2K "hit" to be focused upon one region. This is politically possible because of the widespread prejudicial stereotypes regarding California.

In short, the severity of the California Energy Crisis is primarily driven by widespread and deeply held Prejudice and Discrimination.

-- Robert Riggs (rxr.999@worldnet.att.net), May 27, 2001.

Although there is much "prejudice and discrimination" in regards to California, it is not the reason they have the problem they do. It's due to the lack of electricity, plain and simple. I feel there is multiple raesons for the lack of juice, including embedded chips but it is not for the reasons you claim.

-- NdewTyme (NdewTyme@NdewT.com), May 27, 2001.

Robert,you sure hit some nails on the head. Having lived and travelled in many parts of the US before moving to rural northstate California,I can readily affirm your experiences. Mindless bashing and partisan quarreling are replacing rational debate nationwide.

While I'm hardly a Democrat or Gray Davis fan,he was realy handed a hot potato on this electric issue. Damned if you do or don't. His predecessor,Pete Wilson didn't just sign this bill,he was one of the key forces in its passage in the present form. In exchange for being able to collect $16 billion in stranded costs,the utility companies agreed to sell most of their generating capacity. With that most local control of the elec supply was gone. Now a key component of Calif's economy was in the hands of forces thousands of miles away, with no stake in the local communities,jobs,future etc.

In the process leading up to the deregulation bill,there were warnings that the system could be gamed,that is manipulated to increase the price independently of the costs of producing or transmitting the electricity. With considerable pressure from Gov Wilson,these warnings were swept aside. Calif was in a recession when the bill was being hashed about,and doing away with the old system whereby there was some local control was supposed to guarantee much cheaper rates,which would translate into more jobs etc. After the bill became law,in July 1998,with the reserve price of electricity at $1/megawatt,it suddenly soared to $2500,then to $5000,then back to $1. All in a few hours. As far as I know there were no physical emergencies such as downed lines or power plants in this time frame. Since no extra electric was needed at the time,it was hardly a newsworthy event,except that it established that it could be done.

Among the many ironies in the present situation. Calif ranks 49th in per capita energy consumption. That the state used less power in 4 of 6 months(Oct 2000-Mar 2001)that it's equivalent time frame the year before. In 1998 an attempt to rescind the 96 dereg bill was soundly defeated,in part by large contributions from the power companies. While it's true that no new power plants have been built in Calif in a decade,that's also true of several other states including some that have experienced significant growth.

Now to be sure there are plenty of "fruits and nut" who believe that ever increasing amounts of electricity will magically flow from the sockets,w/o any production costs,considerations or new power plants. But this is hardly a geographical phenomenon-the NIMBY syndrome is present in most parts of the country. Technology wise the stuff is out there to be way more energy efficient. Focusing on that could probably save 30% of the energy consumed nationwide,while maintaining the vast majority of conveniences. But it seems to be a control issue more than a no-can-do issue. Many large corporations and their political allies are determined to paint conservation as a caveman freezing in the dark scenario,rather than looking at the jobs,opportunities and profits to be made from a serious energy conscious retrofit. Too bad. Howard

-- Howard (dryfarmer@hotmail.com), May 27, 2001.