INDUSTRY sees worse-than-expected summer power shortages

Wednesday, May 16th 2001, 12:00 am
By: News On 6

WASHINGTON (AP) _ Power problems could spread into the Northeast this summer, electricity grids in Texas and the Pacific Northwest are being watched closely, and California could average 20 hours of blackouts a week, electricity industry experts say.

The gloomy forecast comes just as President Bush prepares this week to release a sweeping energy policy that is expected to focus heavily on long-term solutions and not this summer's power concerns or high gasoline prices.

Under pressure from Democrats and many Republicans to offer voters a quick fix, White House press secretary Ari Fleischer told reporters Wednesday, ``The president's proposal will help in the short term.''

Fleischer, who previously had maintained that there are no short-term answers to the nation's energy woes, said the promise of future supplies would drive down prices among investors who speculate on short-term oil price trends.

Among the recommendations that will be made by the president's energy task force is a call for more transmission lines and power plants to address future electricity needs and changes in air pollution rules to improve the production and distribution of gasoline, according to government sources.

But none of these proposals will help this summer, officials acknowledge.

The North American Electric Reliability Council, an industry-sponsored watchdog organization, said in a report Tuesday that California's power problems this summer are likely to be worse than even state officials have predicted, with 260 hours of rolling blackouts _ an average of 20 hours a week _ likely because of a power shortfall that could be as much as 5,000 megawatts during peak demand periods.

A megawatt is enough power to serve 1,000 homes.

While most of the country will have enough electricity, the council's report also warned of potential problems in the Northeast, with possible power disruptions if there is a persistent heat wave, and in the Pacific Northwest as well as possibly in Texas. The New York City area could have blackouts if there are transmission problems on lines into the region, the report said.

While Texas has plenty of electricity, it ``should be closely watched'' because the state is shifting into a retail competitive market in June and consolidating some grid management activities, David Cook, the reliability council's general counsel, said.

``There is no magic bullet, no single thing to be done that will solve the challenges we face'' in trying to assure electricity reliability, Cook said in testimony before the Senate Energy and Natural Resources Committee.

In the Pacific Northwest, there is expected to be enough power to meet summer demand despite low hydroelectric generation as a result of a severe drought. But, the report said, if the region's drought continues, there could be rolling blackouts next winter.

In other developments Tuesday:

_The Energy Department said there were some signs that gasoline prices may ease around Memorial Day as refiners have revved up production and inventories were beginning to build.

But John Cook, director of the Energy Information Administration's petroleum division, cautioned any refinery disruption or pipeline problem could cause prices to soar again. ``Today, little cushion exists,'' he said at a House hearing.

_The Senate Finance Committee by an 18-2 vote rejected a proposal by Sen. Jay Rockefeller, D-W.Va., for a windfall profits tax on energy company earnings above a 20 percent rate of return. Critics said the proposal would stifle energy investment.

_Vice President Dick Cheney, briefing GOP lawmakers privately, dismissed concern about high oil company profits, declaring the oil business ``is a lousy cyclical business,'' according to several people present. Sen. Susan Collins, R-Maine, reportedly told Cheney that Republicans were ignoring the oil industry profit numbers ``at our peril.''

The White House, meanwhile, sought to garner political support for its energy package and counter Democratic criticism that it focuses too heavily on production and not enough on getting people to conserve energy.

After courting labor leaders earlier in the week, the White House briefed executives representing renewable energy industries _ from solar and wind power to producers of ethanol and organic waste energy plants _ on parts of the energy package.

The executives were pleased with some proposals of tax breaks for renewables, but, said Jaime Steve of the American Wind Energy Association, ``other items need to be included.''

In Congress, Republicans promised to move swiftly on energy legislation once the Bush proposals are announced. Democrats, however, announced their own proposals in the House on Tuesday and promised a fight unless more emphasis is put on energy conservation and protection of the environment.

``We can have adequate supplies of energy and save our environment at the same time,'' said House Minority Leader Dick Gephardt, D-Mo., adding that ``we don't have to just drill our way out of this problem.''

Republicans said they expect the president to propose conservation measures as well as proposals to spur new energy development such as opening additional public lands for oil and gas drilling and easing regulatory barriers to building power plants, electric transmission lines, and promote nuclear power.