FERC Expected to Expand Price Limits
WASHINGTON – As a federal energy commission -- with two new Bush appointees on board -- prepared Monday to take up proposals to ease Western electricity prices, President Bush emphasized his opposition to price controls.
The Federal Energy Regulatory Commission, at a meeting later in the day, was expected to expand electricity price limits in California to include 10 other Western states and to cover sales outside of periods of power emergencies.
"I want to see what they have to say," Bush told reporters at the White House Monday. "Although I've had the opportunity of naming two members to the FERC, they are independent. They know full well my administration's belief that price controls will not solve the problem."
Other Republicans hoped action by FERC would stem growing pressure in Congress for the federal government to impose broader cost-based price controls on Western electricity sales.
Democrats, newly in control of the Senate, made clear last week that they intend to make energy costs a key issue in the coming weeks. They already have launched a series of hearings on the California power problems and called for price caps on Western electricity sales.
Western power markets "are out of whack" and the federal government is obligated under the law to assure prices are just and reasonable, Senate Majority Leader Tom Daschle, D-S.D., said on "Fox News Sunday."
Bush has strongly opposed price controls in energy markets, including California's electricity sales, which for much of the year have been 10 times what they were in 1999 before dropping in recent weeks.
However, The Washington Post quoted unidentified administration officials as saying the president would endorse less stringent price limits imposed by FERC.
GOP congressional leaders, meanwhile, stayed firm in their opposition to price controls.
"When Democrats say price caps, I believe that's the problem, not the solution," said Senate Minority Leader Trent Lott, R-Miss. He promised to fight price cap legislation and urged Bush to veto any such bill should it pass.
But a growing number of GOP lawmakers also have become worried that if Republicans are viewed as obstructionist in the face of soaring Western electricity costs and high gasoline prices nationwide, they could lose control of the House in the 2002 midterm elections.
In a letter last week, more than a dozen House Republicans urged the commission to broaden the electricity "price mitigation plan" it approved in April and extend price limits to all sales and to 10 other Western states.
Currently, the order is confined to whenever California's energy reserve drop below 7.5 percent, triggering an emergency.
California Gov. Gray Davis, a Democrat, claims FERC's earlier action has done little to ease his state's power problems because it sets limits too high and includes loopholes that allow power providers to easily avoid them altogether.
"If they plug some of the loopholes ... then they will have begun to do their job," Davis said.
The commissioners have refused to discuss their plans, but FERC Chairman Curtis Hebert is said to view an expansion of the April order favorably. The April plan passed 2-1 with Commissioner William Massey, one of two Democrats, opposing it on grounds it did not go far enough to stop price gouging.
Since then, the commission has gained two more members: Pat Wood, a Bush confidant and former head of the Texas utility commission; and Nora Mead Brownell, a former Pennsylvania utility regulator. Although both are Bush appointees, they are viewed as more receptive to price intervention than is Hebert, a staunch defender of the free-market system.
Whatever action the five-member FERC may take, it is viewed pivotal by lawmakers of both parties.
Sen. Jeff Bingaman, D-N.M., the new chairman of the Senate Energy and Natural Resources Committee, warned that unless the commission takes more steps to curtail profiteering, he will push legislation within the next two weeks requiring further federal measures.
In the House, Democrats likewise believe they have a politically potent issue.
Last week, when a House committee rejected by a party-line vote a spending bill rider on price caps, an angry Rep. Nancy Pelosi, D-Calif., the measure's sponsor, snapped: "I think Republicans don't know how much damage they did to themselves today. They voted in favor of the gougers."
It's the kind of rhetoric that is making GOP members nervous.
"We hope FERC will do its job," said Rep. Randy Cunningham, R-Calif., who has had to explain the high power costs and blackouts to his constituents. "If they find unreasonable charges they should act."