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THE CALIFORNIA ENERGY CRISIS

Senators Introduce Price-Control Bill, but Opposition to Idea Persists

February 09, 2001|RICHARD SIMON and ROBERT L. JACKSON | TIMES STAFF WRITERS

WASHINGTON — California's senators made a renewed pitch Thursday for temporary price controls on wholesale power supplies, but the response from a top federal energy official and GOP leaders in Congress signaled that they remain unconvinced that the administration should offer help.

Democratic Sens. Dianne Feinstein and Barbara Boxer took to the Senate floor to introduce new price-control legislation even as Curt Hebert, chairman of the Federal Energy Regulatory Commission, said in a speech across town that "no one's been able to prove to me that price caps will work."

Still, Hebert, in remarks at the National Press Club, promised to keep an open mind and, in fact, met with Feinstein for 90 minutes later in the day.

The Senate Energy and Natural Resources Committee will hold a hearing this month on the Feinstein-Boxer bill. Separately, the Senate approved a study, to be conducted by the National Academy of Sciences, that would examine rising natural gas prices that have roiled California energy markets.

A bipartisan group of California members of Congress has urged the federal government to limit wholesale electricity prices in the West. Critics say such price controls would only make matters worse by discouraging the construction of much-needed power plants.

The Feinstein-Boxer bill would direct FERC to establish rates based on "cost of service" when the agency finds that "unjust and unreasonable" wholesale prices are being charged.

"The role of the federal government in this crisis is to provide an interim period of price stability and prevent price gouging until the market straightens itself out," Feinstein said. She said her proposal would guarantee suppliers a reasonable rate of return for power.

Warning of potential risks to the wider U.S. economy, Boxer said: "Just remember, when California gets a cold, they sneeze all over the country."

But Sen. Gordon Smith (R-Ore.) complained that California has imposed relatively modest rate increases on consumers while utility bills have risen in neighboring states that have sent power to California.

"Those who would advocate [wholesale] price caps without lifting of retail caps are giving the green light for California to send their energy bills to Oregonians, and that's wrong," he said.

Said Hebert, appointed energy commission chairman by President Bush: "The power crisis is a California problem. . . . California cannot rely on a federal bailout. The state needs to go back and revisit where the problem originated."

In other developments:

* The Senate Banking Committee will hold a hearing today on whether the California electricity crisis is an emergency that justifies the president's invoking the Defense Production Act to direct companies to supply natural gas to the state.

* Feinstein introduced legislation to provide $25 million to aid small businesses facing high energy costs in the West.

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