CHENEY: No way to help California energy in short term

Saturday, May 26th 2001, 12:00 am
By: News On 6

WASHINGTON (AP) _ 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.

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.

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.