California On Its Own For Power After Feb. 7 State on Own After Feb. 7 Carolyn Lochhead, Marc Sandalow, Chronicle Washington Bureau Thursday, January 25, 2001 ©2001 San Francisco Chronicle

URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/01/25/MN183889.DTL

Washington -- With the Bush administration unlikely to force more energy deliveries for California, the state's congressional delegation is pushing other ways for the federal government to help the state find its way out of the power crisis.

While administration officials have given little indication they'll step in,

Sen. Barbara Boxer has introduced three bills to force continued federal help and slam the out-of-state power generators for gouging California consumers.

Energy Secretary Spencer Abraham announced Tuesday a two-week extension to force electricity and natural gas producers to supply power to California. But Abraham said the state can't expect any further help when the order expires Feb. 7.

Two California Democrats, Sen. Dianne Feinstein and East Bay Rep. Ellen Tauscher, said the California delegation was grateful for the extension, but expect the Feb. 7 deadline is real.

"Abraham said to me that it would be very hard for them to see their way clear to do another," Feinstein said.

Asked if two weeks is enough time for the state to resolve the crisis, Tauscher added, "It's going to have to be."

Tauscher also said she did not see how the state could avoid further electricity rate increases for consumers. Feinstein said much the same thing last week -- a position at odds with Gov. Gray Davis's efforts to somehow shield consumers from soaring electricity costs.

"I don't know how you don't raise rates," Tauscher said.

The nation's top federal energy regulator also rebuffed the wholesale price caps that Davis and Feinstein continue to request and said California must solve its problems largely on its own.

Curt Hebert, named chairman of the Federal Energy Regulatory Commission by Bush on Monday, said, "When there are state problems we should let the states do what they can to resolve their conflicts, and it is my belief that quite frankly the worst thing we can do is get in their way."

Hebert and other Bush administration officials, however, will meet Feb. 1 with Western state governors to discuss the power crisis.

Boxer introduced three bills yesterday that would greatly increase federal intervention.

The most controversial would slap a "windfall profits tax" on electricity wholesalers that sell power at rates higher than what regulators determine is "fair and reasonable."

The money would then be distributed to consumers. Boxer showed reporters charts -- which will get wider display when she displays them on the Senate floor next week -- that illustrate the rising profits of electricity generators, whom the Senator described as "these people who ripped us off."

Boxer said the overall growth in net income for out-of-state electricity producers between the second quarter of 1999 and the second quarter of 2000 was 333 percent.

Boxer conceded that the measure was all but doomed in Congress, where many in both parties oppose such measures, but said the attention would help to "expose the outrageous profit."

Boxer also called for providing up to $2,000 in refundable tax credits for consumers who take energy conservation measures, and a federal loan fund to states to build electricity generating plants.

But sympathy for bailing out California from its energy fiasco is running low in Washington, even as concern about its repercussions is rising fast.

Senators from Oregon and Washington -- who strongly opposed the Bush administration's renewal of the emergency orders -- complained that the orders are draining the reservoirs that fuel hydroelectric plants, endangering salmon runs, raising consumer rates and threatening electricity shortages in the summer when demand peaks.

Western utilities are buying power on the same wholesale market where soaring prices have driven California's utilities near bankruptcy.

The Wall Street Journal reported yesterday that consumers in Tacoma, Wash., were hit by a 50 percent rate surcharge, and the utility serving the Tohono O'odham Indian reservation in Arizona raised rates 30 percent and must recover another $1 million from its 13,000 customers, even though unemployment on the reservation is 20 percent.

In addition, the Bush administration and many Republicans in Congress have a strong philosophical opposition to energy re-regulation, especially because they see California's woes as self-made.

There is also wide agreement that while the federal government can assist at the margins, the resolution of the problem rests with the state.

White House spokesman Ari Fleischer said the administration is exploring various options, including relaxing some environmental rules to speed construction of new power plants and keep current ones operating at capacity.

"But again, the federal arsenal is small in this issue," Fleischer said. "We cannot pass laws for the state of California. No one in the federal government can."

While many Democrats largely agree, Feinstein and others want at least temporary federal intervention to put a lid on soaring wholesale prices.

Feinstein has been joined by two House members, Republican Duncan Hunter of Alpine and Democrat Anna Eshoo of Atherton, behind legislation that would give Energy Secretary Abraham the authority to impose temporary wholesale price caps on the Western region to give the state's utilities breathing room.

"It's fair to say California has to do its part," Eshoo said. "But we don't have any negotiating power now with the out-of-state generators. They can gouge and do whatever they want."

FERC's Hebert rejected the idea yesterday, saying price caps could lead to re-regulation of the entire U.S. electricity market.

"At the end of the day you have to ask which direction you would go in," Hebert said. "Do you go in the direction that says we're going to have price caps in the Northwest, and then if you find maybe that it's spilling off into the Midwest, do you say, well, because we did them in the Northwest, now we maybe need them in the Midwest? And then you make the whole circle and you end up in the Southeast and everyone's under price caps."

Hebert said he has talked with California lawmakers and that they "now understand what I've been saying, that in the end . . . any and all remedies you look at need to do one or two things: it either needs to increase supply or it needs to decrease demand. And if it's not doing one of those things, you have to ask what are you doing and what is its purpose."

E-mail Carolyn Lochhead at clochhead@sfchronicle.com. / E-mail Marc Sandalow at msandalow@sfchronicle.com.

-- Martin Thompson (mthom1927@aol.com), January 25, 2001