Northwest blackout fears grow

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http://www.contracostatimes.com/news/topstory/westgovs_20010203.htm Published Saturday, February 3, 2001

Northwest blackout fears grow

Governors want rules eased on new power plants to keep California's crisis from spreading; Bush says no cap on wholesale prices

By Matt Sebastian TIMES STAFF WRITER

PORTLAND, Ore. -- Facing an energy crisis expected to worsen by summer, 10 Western governors Friday asked the Bush administration to streamline environmental regulations in an effort to speed construction of new power plants.

The request came as Western leaders meeting in Portland predicted California-style blackouts could plague the drought-stricken Pacific Northwest this summer unless the federal government intervenes immediately.

Federal officials expressed willingness to hasten plant approvals, but they made it clear Friday they won't cap the skyrocketing wholesale energy costs that have wreaked havoc on California's power industry.

"This crisis is going to spread to other parts of the country," said Washington Gov. Gary Locke, already seeing rates rise in his state. "The policy of inaction by the Bush administration is not going to be well received by the public."

Friday's energy summit, hosted by the Western Governors Association, was convened to find short- and long-term solutions to the power crisis that last month forced blackouts across Northern California.

The group planned to send a regional assessment of the situation to the president, who this week tapped Vice President Dick Cheney to coordinate a national energy policy to address the West's power woes.

"I think the key thing we're all worried about here is that we don't drag the economy down permanently," Wyoming Gov. Jim Geringer said.

Gov. Gray Davis, fresh from signing into law his $10 billion plan to put California into the power-buying business, was praised for his efforts to tame the effects of his state's failed deregulation of the electricity business.

"I think Governor Davis proved California can stand on its own with the actions they've taken," Energy Secretary Spencer Abraham said.

The governors endorsed a series of short-term steps to tackle their energy problems, including sending better price signals to ratepayers, offering rebates to customers who voluntarily reduce their usage and providing federal or state assistance to low-income families struggling to pay high utility bills.

In the long term, the governors backed tax incentives for energy-efficient technologies, urged the construction of a new Alaskan natural gas pipeline and encouraged the development of domestic oil, gas, coal and wind resources.

The group agreed the West's most pressing power problem is the lack of generating capacity. To speed the process of building new plants and expanding older ones, the governors want to ease -- but not eliminate -- the environmental regulations that can tie up the approval of such projects for years.

Davis said he's already worked to trim California's power plant approval process from a year to six months -- and he would like to see it cut to three months.

But, the governors insisted, streamlining can't be done to the detriment of the environment.

"We must find ways to make twice the environmental progress in half the time," Utah Gov. Mike Leavitt said.

Officials from the Environmental Protection Agency said they are willing to do their part to ease the Western power crunch, including issuing orders waiving some emission standards during times of crisis.

"We firmly believe we can have strong environmental protection and have ample, reliable energy," said John Beale, the EPA's deputy assistant administrator. "We need regulatory efficiency, and we need energy efficiency."

The 10 governors, however, couldn't agree on one of the most talked-about topics of the day -- wholesale price caps. Several of the governors, including Davis, support "cost-plus" caps that would allow wholesalers to recoup their costs and make a 25 percent profit.

"Controlling these crippling prices is something concrete and tangible the federal government can do now," Oregon Gov. John Kitzhaber said.

But Curtis Hebert, chairman of the Federal Energy Regulatory Commission, said artificially lowering wholesalers' prices will only encourage utilities to continue buying power on the volatile spot market.

"The evidence insists that, quite frankly, (price caps) do long-term damage and show no long-term benefit," said Hebert.

William Massey, a fellow FERC member, urged his colleagues to be more aggressive and institute the "cost-plus" price caps. He also called for a federal investigation into why wholesale prices have soared in recent months.

"My agency has a statutory authority to ensure reasonable, just and fair prices," Massey said. "This is the law of the land."

Hebert dismissed those concerns of price gouging -- echoed by several Western governors -- by releasing a staff audit that concluded there was no evidence to suggest energy producers planned plant outages in California in an effort to manipulate prices.

The governors of Washington and Oregon expressed concern that their states could face rolling blackouts this summer unless the rates are capped. The region, heavily dependent on hydroelectric power, is in the midst of a drought, the fourth-worst on record.

"I'm not sure we're going to have any power to send to California this summer," Locke said.

Oregon's governor was more grim, calling blackouts in the northwest "highly likely."

Davis, though, said he's confident that this summer will be manageable. "We believe we can get through this summer without any substantial disruptions," he said.

-- Swissrose (cellier@azstarnet.com), February 03, 2001


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