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Wednesday December 20, 9:43 pm Eastern Time

Probe sought on high California electric prices

By Judith Crosson

DENVER, Dec 20 (Reuters) - Western U.S. governors on Wednesday asked federal authorities to investigate why wholesale electric power prices in California have skyrocketed and urged the state to redouble its own conservation efforts.

But they declined to endorse temporary regional price caps that some believe would buy time for California, calling instead for a study on caps.

To alleviate the problem, U.S. Energy Secretary Bill Richardson, who was at the meeting, announced he was extending a little used emergency order -- set to expire on Dec 21 -- to require generators and marketers with excess power to make electricity available to the California market.

``I'm going to extend the order for another week with the idea that I'm not going to do this forever,'' he said.

Richardson called the power shortage ``the downside of a booming economy'' where energy use rose 14 percent over last year nationwide and electricity use in California rose 13 percent.

The increased demand has put California in the hot seat as it struggles to avert rolling blackouts. Fears are mounting the shortage will spill over into other western states like Washington that import a portion of their power from California in the winter.

Two of the state's major utilities face bankruptcy and Richardson has warned that thousands of utility jobs could go by the wayside if the problem is not solved.

PG&E Corp. (NYSE:PCG - news), which warned its quarterly dividend was at risk because of soaring wholesale power costs, and Edison International (NYSE:EIX - news) have drained their cash reserves to buy power at skyrocketing prices.

A combination of low rainfall for Northwest hydroelectric dams, power plants closed for maintenance, unusually hot weather this past summer in California and the crisis in the state's power markets all worked against the normal flows of electricity throughout the region, experts have said.

The price rise has been staggering as utilities are forced to turn to high-cost power now at $1,400 per megawatt hour, compared with $35 per megawatt hour last year.

MEETING PROVIDES FEW ANSWERS

But few answers came from Wednesday's meeting of western governors, power marketers and utilities seeking ways to generate enough power for California without jeopardizing other western states that furnish it with power.

They agreed long-term solutions are needed, including conservation, higher production and in some cases faster permitting of electric utility plants. Richardson said wind power and alternative fuels should also be in the mix.

The governors of Wyoming, Colorado, Utah, Washington and Oregon also called for a coordinated, state-by-state, voluntary conservation plan to free up electricity in the West and will meet in late January or early February to address the issue of long-term planning.

But only Washington Gov. Gary Locke joined Richardson's call for a temporary regional price cap on wholesale prices.

Instead the group called on the Federal Energy Regulatory Commission (FERC) to study the implications of a regional price cap and to investigate who has benefited from higher wholesale prices and whether generating capacity has been held back in this time of need.

Locke, a Democrat, said the Pacific northwest was facing an immediate crisis. ``We are in dire straits come this January,'' he said. California provides power to Washington in the winter and receives it in the summer. ``If they're (California) telling us now they will not be able to give us any bit of electricity we have a major crisis coming up,'' he said.

NOT CONVINCED CALIFORNIA HAS DONDE ALL IT CAN

The governors were not convinced California has done all it can to solve the problem. ``We in the rest of the western states say okay, if we're going to conserve and if we're going to provide excess power and then we find you in California could have done more, there is going to be resentment,'' Wyoming Gov. Jim Geringer, a Republican, said.

Another problem the governors see is that while wholesale prices are going through the roof, by law California utilities cannot pass the price hike on to consumers.

Oregon Gov. John Kitzhaber, a Democrat, said it makes it hard to persuade consumers in the Pacific northwest to send energy to California if residents there are not paying the extra cost. ``We all have to take some political heat, including the governor of California,'' he said.

California Gov. Gray Davis, a Democrat facing his first big political test in the power crunch, sent a representative who said the state is making efforts. Erik Saltmarsh, chief counsel for the Electricity Oversight Board, said passing on to consumers the actual cost, which can be as high as $80 a day, would be too great a social burden.

FERC Chairman Jim Hoecker told reporters later that price caps were not necessarily off the table, ``but I didn't hear the governors request us to do that.''

The governors also asked President-elect George W. Bush to convene a formal team to work with them.

-- (Reuters@news.article), December 21, 2000

Answers

Now that La Nina is gone and our rainfall is returning to normal, we will have enough power for us in the NorthWest. And next summer when California wants to buy power from us for their airconditioning.... Well tough shit, let them sweat out the 300% increase we demand from them!!!

Why should individuals here pay extra for power when the individals there don't have to conserve?

We have a habit of conserving energy and water anyway. It is part of our culture up here in Washington State. It's time that was something they learned down in California, the center of the hedonistic society.

-- Cherri (sams@brigadoon.com), December 22, 2000.

Cherri,

Oh yeah! We'll just annex Oregon and Washington and take what we want. So there.

-- Cave Man (caves@are.us), December 22, 2000.

Cave: ROFLMAO...um, good one.

-- sumer (shh@aol.con), December 22, 2000.

Cherri,

There's a distinct difference in California & energy/water conservation that you see once you pass over the ridge route {northern ring around the LA basin}.

Up in central CA, our supermarkets look like they do when running off generators after a disaster - the overhead lights are mostly put out now, etc. If they have them, folks mostly still insist on running their holiday lights in the evening, though they aren't near as popular in this part of the state.

The publicity drums have been building up to this crisis for quite a long spell now.

Anyone want to start a pool for how long it'll take until we're 'fighting for peace' again?

-- flora (***@__._), December 22, 2000.