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Bush signs bill to keep california power flowing Subjects: Electric utilities, Power supply, Electric power, Energy shortages
Locations: California
People: Bush, George W
Document types: News
Section: A SECTION
ISSN/ISBN: 01908286
Text Word Count 1161
PresidentGives Aid,WarningTo Calif.; Order to Supply PowerIs Called the Last; [FINAL Edition]
Mike Allen and Peter Behr.
The Washington Post. Washington, D.C.: Jan 24, 2001. pg. A.1
Full Text (1161 words)
Copyright The Washington Post Company Jan 24, 2001
President Bush issued an order yesterday to help keep power flowing temporarily to blackout-plagued California, but warned the state that it must solve its own problems in the future.
Bush granted the state's request for a two-week extension of a pair of federal directives that require electricity- and natural gas- producing companies within and outside the state to continue supplying utilities that are near bankruptcy. Energy Secretary Spencer Abraham said no further extension is planned.
The California energy problem has emerged as the first major policy test of the young administration. California is the nation's most populous state and has the sixth-largest economy in the world, and the ripple effect of business disruptions there could exacerbate any downturn in the national economy.
Looking toward 2002 and beyond, both Democrats and Republicans fear they could be blamed for the blackouts, depending on what happens in coming months.
Lawrence B. Lindsey, Bush's chief economic adviser, said the long- term solution is to be found in the energy proposals from Bush's campaign, which emphasize increasing the supply of energy by expanding drilling and pipelines.
"Most of the solutions to California's energy crisis lie in California -- we just want to be helpful in facilitating that," Lindsey said.
He joined four of Bush's Cabinet members in a meeting on the California situation on Monday, the first business day of the administration.
"We are very concerned about the long-term energy situation," Lindsey said. "President Bush pointed out with his comprehensive energy strategy that we have a serious problem. We now appreciate that the scope of the problem is greater and more immediate than we realized."
Analysts said Bush faced a dilemma over yesterday's orders. If he had allowed the directives to lapse and the state's blackouts had worsened, the administration could have been blamed for the economic consequences. But by renewing the orders, Bush is, in effect, forcing generating and power marketing companies -- including some contributors and political allies -- to ship power to California utilities that are virtually bankrupt.
The administration also was facing pressure against further renewals from lawmakers in states around California. Those lawmakers fear that their constituents are suffering because the orders require energy producers in their region to send power to California's stricken system. Sen. Gordon Smith (R-Ore.) spoke with Bush by telephone yesterday about his concerns and was told the orders would not be renewed.
The emergency action follows six orders by the Clinton administration since December and directs energy suppliers and marketers to direct to California any electricity not committed to other customers.
Analysts believe last week's blackouts were in part caused by a reluctance of energy companies to sell to some California utilities because of their mounting credit problems.
Abraham, the energy secretary, said yesterday's decision should give the state enough time to "restore the financial health of the utility companies and develop other sufficient sources of energy." He said California Gov. Gray Davis (D) has assured him that no further extensions will be needed.
"While we do not intend to write legislation for the state," Abraham said in a statement, "a real solution must address the need for the construction of more electric power generation in California, reform of the flawed state market rules, restoration of the financial health of California's utilities and encouragement of greater conservation. If California takes these steps, it is my belief that the current situation will be resolved."
Bush also faces possible charges of conflicts when dealing with energy matters, since he founded an oil exploration company and Vice President Cheney was chief executive of an energy services company. A study by the Center for Responsive Politics found that Bush's campaign received $2.8 million from energy and natural resources interests, while Al Gore got $300,000.
Energy interests also were heavy contributors to Bush's inauguration and his transition. "With such strong ties, every act on the part of the president will be looked at as a possible payback," said Steven Weiss, the center's communications director.
Curt Hebert Jr., appointed by Bush on Monday as chairman of the Federal Energy Regulatory Commission, said that in return for the administration's decision to compel energy-generating and marketing companies to supply power to California, state officials should guarantee that the companies' wholesale prices will be paid. California's two largest power distribution companies owe $12 billion to suppliers, and they cannot raise cash by increasing rates to their customers.
"The very people that are going to provide the energy now have no faith that these utilities are going to pay them," Hebert said in an interview. "Shouldn't there be a quid pro quo? . . . The 'something for something' should be this, I think: that the state should have to stand behind the credit of these utilities."
"Somehow there has to be some kind of financial support to ensure that the bleeding has stopped," Hebert added.
Hebert, head of an independent federal agency that regulates wholesale electricity rates, said that California's power emergency is likely to extend into the summer. States on California's borders, New York and parts of New England may face similar shortages if hot summer weather forces heavy demand for air conditioning, he added.
"It is important the American public know right now that these are things we see on the horizon that short-term fixes will not take care of," Hebert said.
White House press secretary Ari Fleischer said Monday that administration officials "are concerned, of course, about any energy problems that take place in our nation's largest state."
The administration's refusal to intervene more aggressively has led to criticism from some Democrats. They maintain that the impact of recurring blackouts could quickly spread beyond California.
"If there had been an earthquake, Bush would be mobilizing people and money," said Rep. Anna G. Eshoo (D-Calif.), who represents the Silicon Valley. "This is a much greater crisis that threatens our nation's economy. Bush no longer has the luxury of the provincial views of the governor of Texas."
In California, Davis issued a brief statement saying that he was gratified by the Bush administration's swift decision to extend the order. "We're hopeful that another request will not be necessary," said Steve Maviglio, the governor's press secretary.
The state yesterday barely avoided temporary blackouts for the third time in a week, when a combination of last-minute shipments of power and greater conservation quelled that immediate threat. The dire shortages yesterday were caused in part by a new problem confronting Pacific Gas and Electric Co., one of the state's largest utilities. Authorities said that it has reached the limit on the number of times that it can ask large businesses and institutions to shut down power in times of crisis in exchange for lower utility rates.
California also began soliciting bids on long-term energy contracts yesterday. The number of bids that it receives from suppliers in the next few days could be a sign of whether the crisis will worsen.
Staff writer Rene Sanchez in California contributed to this report.
© 2002, 2005 The Washington Post Company
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