California Wants Washington And Oregon To Form 'Energy Cartel'

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California Wants Washington And Oregon To Form 'Energy Cartel'

May 16, 2001 By KOMO Staff & News Services

SACRAMENTO - California should form a "buyers' cartel" with Oregon and Washington to rein in soaring energy prices, nine Assembly Democrats said Wednesday.

The states should set their own price ceiling on electricity in light of federal regulators' refusal to set region-wide caps, said Fred Keeley, the Assembly's point man on energy.

The states would refuse to pay, under any circumstances, more than a predetermined price that would give electricity generators a "reasonable" profit, under a resolution sponsored by the nine Democrats.

'A Dose Of Their Own Medicine'

That would mean almost certain blackouts in California this summer, said Assemblyman Paul Koretz, the measure's author. But those will happen anyway, by all accounts, and the price cap would let the state better predict and manage the outages, he and Keeley said.

Caps would "give these power generators a dose of their own medicine," Koretz said. "They've been gouging us at every opportunity - most of us believe by price manipulation - making obscene profits at our expense."

It would be far better for the Federal Energy Regulatory Commission to set Western price caps, Keeley said.

He and Assembly Speaker Robert Hertzberg, a Democrat, are asking FERC to reconsider last month's limited caps that Keeley and other Democratic officials say could actually drive up power prices under some circumstances, but are insufficient to control prices at other times.

However, Keeley doubted FERC and the Bush administration will reverse their opposition to caps that they believe would hinder the development of a free energy market. In that light, Keeley said California must find another way to cap skyrocketing electricity prices itself, or bankrupt its budget and economy.

A Unique Parternship

The strategy won't work without Washington and Oregon, however, Keeley said, but the three acting together can effectively set energy prices throughout the 11 Western states.

The Pacific Northwest states are vulnerable this summer as well, due to dry conditions there, said Lenny Goldberg of San Diego-based Utility Consumers' Action Network. The group first suggested the strategy a month ago.

"At some point it's going to take some drastic action to deal with this crisis and get us through the summer," Goldberg said.

Keeley and Koretz said they believe it would be easier for Democratic Gov. Gray Davis to negotiate caps with other states if he has the backing of the Legislature. Similar efforts have been discussed within the Davis administration, said spokesman Steve Maviglio, but Davis had no immediate reaction.

The lawmakers dismissed generators' objections that capping power prices would prompt them to sell their electricity for higher prices to other states, or dissuade generators from building more power plants in California. California is too large a market for the power producers to ignore, they said.

If generators refused to sell electricity because of the caps, the state could respond by seizing the plants themselves, said Koretz and Goldberg, though Keeley had reservations.

Caps Would Last For Two Years

The resolution proposes that caps be installed for two years, until enough power plants can be built to allow the market to function naturally.

The state has been buying power for the customers of three major utilities since mid-January. The utilities' credit was cut off after they amassed debts of more than $14 billion dollars due to high wholesale electricity prices that they were unable to pass on to customers.

http://www.komotv.com/news/story.asp?ID=11144

-- Martin Thompson (mthom1927@aol.com), May 16, 2001

Answers

That would be the quickest way to guarantee blackouts that I can think of.

-- JackW (jpayne@webtv.net), May 17, 2001.

Yes, it would for sure give them lots of blackouts. But it would also save them a pile of dinero and they are going to have the blackouts anyway. Maybe they would get the blackouts organized so they wouldn't be so devastating. However, I don't see Washington and Oregon being a part of this. I think they would just as soon distance themselves from California as they could. There has always been this big sucking noise coming from the northern border of California. If given a chance, Calif would have all the power, and would have the Columbia river diverted south to LA!

-- Taz (Tassie123@aol.com), May 19, 2001.

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