Energy Price Caps Shot Down At Power Summit

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Energy Price Caps Shot Down At Power Summit Facing Power Crisis, Governors, Experts Plot Course

PORTLAND, Ore., 3:27 p.m. EST February 2, 2001 -- Faced with fears that California's power troubles could drag down the economy of the entire region, governors from nine Western states met Friday in downtown Portland.

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RELATED WEB SITES Cal ISO FERC Legislation PG&E SDG&E SoCal Edison UCAN The governors hoped to emerge from energy policy meetings with short-term solutions to their states' electricity shortages and a long-term plan for coping with increasing energy demand.

"While most of the nation's attention has focused on the problems plaguing California, the nation's energy situation is having major impacts in all Western states," said Idaho Gov. Dirk Kempthorn, who was leading the meeting for the Western Governors' Association.

"The economy of the entire West is at stake," he said.

Energy Secretary Spencer Abraham told the conference that Vice President Dick Cheney will head a task force to find a quick solution to an energy crisis that threatens national security.

Abraham said that it is clear that America's national security, as well as its economic security, is dependent on its energy security.

Alan Richardson, chief executive of the utility PacificCorp, said that while price caps could control prices in the short term, they also could trigger supply shortages and subsequent price increases. He said that he would urge the governors to instead focus on conservation, such as finding large customers willing to use less power and paying households to install energy efficient appliances.

Californis Gov. Gray Davis, Oregon Gov. John Kitzhaber and Washington Gov. Gary Locke pleaded for temporary, short-term relief from energy generators they said are gouging the consumers of electricity.

Abraham, Federal Energy Regulatory Commission chairman Curt L. Hebert, and leaders of the Navajo and Fort Mojave tribes joined the talks.

Abraham left to attend a news conference where he said that a price cap would be a disincentive to building more power plants.

Locke said that utilities are having to buy power on the spot market at higher rates during peak hours. This, he said, was causing prices to go up between 30 and 40 percent.

The three governors were disappointed at the secretary's quick dismissal of their request.

"If that is the knee jerk response to states that are hemorrhaging, that's pretty irresponsible," Kitzhaber said.

"I think that says we're all on our own with higher energy costs for the next several years," according to Locke.

Besides their economic connections, the Western states are connected by the infrastructure of the Western Power Grid, which distributes electricity to 11 states and two Canadian provinces.

Locke said in an editorial in the Wall Street Journal Friday that Bush and Abraham "should put pressure on the Federal Energy Regulatory Commission to stabilize the market immediately by putting temporary price controls on wholesale electricity. They should also ask Congress to expand the federal assistance that helps low-income people pay their electric bills."

Idaho Gov. Dick Kempthorne made it clear that not everybody at the summit favors price caps.

"This is not a unanimous decision. There are other governors who believe price caps are a disincentive to brining on new generation facilities," Kempthorne said.

Steven Wright, the acting administrator of the Bonneville Power Administration, said that the region faces a 60 percent rate increase over the next five years, meaning that electricity prices will double by the end of 2002.

A lack of snowpack and rainfall has left the area's reservoirs depleted this winter. Another month without significant rainfall could lead severe shortages during the summer months, Wright said.

http://www.channel2000.com/sh/news/stories/nat-news-245420010202-080203.html

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


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