Cost of power crisis will be stunning, governors told

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Cost of power crisis will be stunning, governors told Timothy Roberts

Either ratepayers or taxpayers are going to have to bear the cost of straightening out California's energy woes, a former U.S. Senator told a gathering of nine Western governors in Portland last night.

"It's going to be expensive, painful and politically devastating; you can count on that," warned Bennett Johnston, former senator from Louisiana, who now lobbies on behalf of energy producers and distributors, including Southern California Edison and San Francisco-based Chevron Corp., which owns a stake in Dynergy Inc., an independent generator based in Houston.

Mr. Johnston also called on the Federal Energy Regulatory Commission to place a temporary cap on wholesale prices so that energy generators -­ including one that he lobbies for -- can't charge unreasonable prices.

But the governor who was the target of Mr. Johnston's remarks was not there to hear them. California Gov. Gray Davis did not attend the opening of the emergency session of the Western Governors' Association. A spokesman for Mr. Davis said the governor was traveling to Oregon and would attend the conference today.

Mr. Johnston said the bill just barely enacted by the Legislature yesterday -- allowing the state to sell $10 billion in bonds so that it can buy the electricity the state needs -- is a good first step. But he warned that the state will have to let Southern California Edison and Pacific Gas & Electric recover what they say is $12 billion in losses incurred during the crisis.

Other energy firms are unlikely to invest in the state unless it allows the utilities to recover the losses, he said.

Utah Governor Mike Leavitt also applauded the action by the California Legislature but warned that state would eventually have to get out of the utility business.

"The state is just shifting the risk from the ratepayers to the taxpayers," he said in a brief interview after Mr. Johnston's address. "You can't shield the consumers from the real costs forever."

Gov. Gary Locke of Washington State said he was encouraged by the action in California, but said that conservation would be another major factor.

"We in Washington have begun an aggressive conservation program so that our utilities don't have to buy power at these outrageously expensive prices that these independent power generators are charging," Mr. Locke said. "If our citizens are not using the power during peak times of the day, then our utilities don't have to buy the power from these independent generators at these obscene prices, and, therefore, we keep our rates low."

http://sanjose.bcentral.com/sanjose/stories/2001/01/29/daily52.html

-- Martin Thompson (mthom1927@aol.com), February 02, 2001

Answers

Energy veteran brings discouraging words to governors' meeting Filed: 02/02/2001

By JESSICA BUJOL

Associated Press Writer

PORTLAND, Ore. (AP) — Nine Western governors looked to an energy policy veteran for advice on the eve of their summit on the region's energy turmoil, but he brought them discouraging words.

If a solution to California's "dysfunctional" market is not found soon, warned former U.S. Sen. J. Bennett Johnston, the entire West could be in jeopardy when electricity use soars with sweltering summer temperatures.

"Where in the world is that electricity going to come from? I think you're going to be short," said Johnston, architect of the 1992 Energy Policy Act, the nation's last comprehensive energy law.

Johnston, D-La., cited several problems with California's faltering deregulation scheme. He said retail prices were not controlled and there were problems transmitting power between Northern and Southern California.

The governors are from Oregon, Washington, Wyoming, Montana, Nevada, Utah, Idaho, Arizona and Alaska.

U.S. Energy Secretary Spencer Abraham and Curt Hebert, Jr., chairman of the Federal Energy Regulatory Commission, are also participants in the summit, which continues Friday.

Oregon politicians are concerned about the increased cost of electricity for Oregonians.

Five members of the state's federal congressional delegation signed a letter urging Abraham to end the order requiring the sale of Northwest electricity to California utilities unless the federal government can guarantee those sales will be repaid. They also advised the FERC to institute price caps.

Oregon Gov. John Kitzhaber has said he favors temporary price caps on wholesale electricity, but the Bush administration has been reluctant to take that route.

During his speech, Johnston said price caps now would secure a free market later.

"What it's going to take is an action by FERC to put caps on the wholesale market," he said. "When you have a dysfunctional market, you need an interim to get to a free market."

Though conservation efforts have been somewhat effective so far, Johnston said it would not be enough.

"There are trade-offs in all of this. The problem is that California made the wrong trade-offs. You have this idea that somehow energy comes from the tooth fairy and you don't have to plan for the future," he said.

Johnston said leaders shouldn't expect any easy answers.

"It's going to be expensive," he said. "It's going to be painful. It's going to be politically distasteful. But if you don't do something ... the buzzards are coming home to roost. I can see them circling."

California, with the sixth largest economy in the world has to be rescued, he said.

"They're kinda crazy in California but they're worth saving and they're ours," Johnston said.

http://www.bakersfield.com/oil/Story/301411p-301172c.html

-- Martin Thompson (mthom1927@aol.com), February 02, 2001.


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