Power Woes Spread

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Power Woes Spread

Power Shortages And Soaring Prices Threaten 11 Western States Regulatory Commission Urged To Take Control Of Electricity Prices Some Say Price Controls Discourage Building Of New Power Plants

SAN FRANCISCO, April 10, 2001

(CBS) No longer is it just California's electricity crisis. Across 11 western states, power shortages and soaring prices threaten disruption everywhere, reports CBS News Correspondent John Blackstone.

"For this summer high prices are all pain, no gain. I fear that the high prices are already damaging the western economy," warned William Massey of the Federal Energy Regulatory Commission.

Members of the Federal Energy Regulatory Commission (FERC) held an unusual meeting Tuesday with western officials in Boise, Idaho.

"We're all very concerned about the high electricity prices this past year in the West and their long duration," said FERC's chairman Curt Herbert, Jr.

The commissioners were bombarded with pleas to take control of soaring wholesale electricity prices. So far federal regulators and the Bush administration have opposed price controls, as have Republican governors of western states, arguing that price controls will discourage investment in new power plants.

But with trouble so clearly spreading, even some Republicans are now calling for federal intervention to bring wholesale power prices in line. "FERC can step in and it can send a very real message to the market don't gouge, don't overprice," said U.S. Senator Larry Craig (R-ID).

The meeting comes on the heels of Gov. Gray Davis' bid to pull California's second biggest utility back from the brink of bankruptcy. He announced a deal on Monday for the state to buy power lines from Southern California Edison for $2.76 billion as a key part of the governor's plan to keep the cash-strapped utility solvent.

That would give Edison money to reorganize its debts and pay power generators, many of which have not been paid for power since last November. The deal requires Edison to provide low-cost power to the state for 10 years and to dismiss a lawsuit seeking hikes in consumer rates, Davis said.

Davis had originally proposed buying parts of the state's transmission grid owned by all three of the state's investor-owned utilities. That plan was dealt a serious blow Friday when Pacific Gas & Electric, the state's largest utility, pulled out of negotiations and filed for bankruptcy protection.

The deal to buy SoCal Edison's lines was the latest development in months of efforts by state officials to bail out the cash-starved utilities.

The state Public Utilities Commission last week approved rate increases of up to 46 percent for customers of PG&E and SoCal Edison, hoping that an infusion of cash might save the utilities.

State power purchases on behalf of the struggling utilities have cost taxpayers $4.7 billion since January.

Behind the crisis are a number of factors, including high demand, high wholesale costs, transmission glitches and a tight supply worsened by scarce hydroelectric power in the Northwest and maintenance at aging California power plants.

State power grid managers said last week California will see more than a month of rolling blackouts for as many as 5 million people at a time if residents use as much power this summer as last summer.

İMMI Viacom Internet Services Inc.

http://cbsnews.com/now/story/0,1597,283287-412,00.shtml

-- Martin Thompson (mthom1927@aol.com), April 10, 2001


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