CALIFORNIA governor says plunge in energy prices temporary; Lieberman joins call for price caps

SAN FRANCISCO (AP) _ Gov. Gray Davis on Sunday said electricity and natural gas prices that plunged last week to their lowest levels in more than a year were likely to climb again. <br><br>Davis said in

Monday, June 11th 2001, 12:00 am

By: News On 6

SAN FRANCISCO (AP) _ Gov. Gray Davis on Sunday said electricity and natural gas prices that plunged last week to their lowest levels in more than a year were likely to climb again.

Davis said in a conference call with reporters Sunday that politicians had pressured energy suppliers into reducing the prices. But he said officials could not guarantee power suppliers would keep rates down.

``We have no power as it relates to pricing other than advocacy, lawsuits, pressure and shame,'' Davis said.

Davis was joined in the call by Sen. Joseph Lieberman. Both urged the Federal Energy Regulatory Commission to cap wholesale electricity prices, which the White House has opposed.

``The president will continue to work with California to address their growing energy needs, but does not want to take action that will make the problem worse, such as price controls,'' White House spokeswoman Anne Womack said Sunday.

Lieberman, the new chairman of the Senate Governmental Affairs Committee, said he doesn't support price caps but ``when a free market is not working ... then you need price relief.''

Lieberman, a Connecticut Democrat, said he hoped FERC would cooperate without being compelled by Congressional legislation.

California represents nearly 15 percent of the U.S. economy and letting it ``continue to suffer'' an energy crisis could have ``a disastrous impact'' on the national economy, Lieberman said.

Lieberman's committee is holding a June 20 hearing on whether FERC is doing enough to hold down rates. Another hearing scheduled for June 13 will focus on the effects of energy deregulation in California, Lieberman said.

``The president hopes the planned hearings will be constructive and not partisan,'' Womack said.

The recent decrease in energy costs has been attributed to mild temperatures that have reduced air conditioner use. Wholesale power prices have dropped from more than $500 a megawatt hour to about $50 a megawatt hour.

Natural gas prices at the California-Arizona state line fell to about $3.50 per million British thermal units last week from nearly $12.

The prices also were also lowered by an 11 percent decrease in electricity usage by consumers last month compared to a year ago.

``We won't have conditions like this in a sustained way until 2004 or 2005,'' said Michael Shames, executive director of the Utility Consumers' Action Network in San Diego. ``This is only short-term relief from a broken market.''

Experts said a long heat wave, reduced power from dams in the Pacific Northwest and increased usage of air conditioners could again send energy prices soaring.

``Declaring a victory at this point is a real overstepping,'' said Severin Borenstein, director of the University of California Energy Institute in Berkeley. ``We risk consumers easing up on conservation. And if we ease up, this crisis will only get worse.''