Bush's California Energy Stance Faulted [It's all Bush's fault, not Gov. Davis', don'tcha know?]

New York Times ^ | Wednesday, May 8, 2002 | By DON VAN NATTA Jr.

[JohnHuang2]

May 8, 2002

Bush's California Energy Stance Faulted

By DON VAN NATTA Jr.

ASHINGTON, May 7 — Throughout California's energy crisis early last year, President Bush and Vice President Dick Cheney strongly opposed any government intervention or price controls intended to rein in the surging costs of electricity.

Today, two of the most prominent California politicians who called for federal intervention, Gov. Gray Davis and Senator Dianne Feinstein, both Democrats, reacted with anger at the release of documents showing that Enron traders had used questionable strategies intended to increase the company's profits from trading power in the state.

Both Mr. Davis and Ms. Feinstein criticized what they said was the Bush administration's failure to heed their suspicions that more than just market forces were to blame for the enormous price increases in wholesale electricity in the state.

They had suspected market manipulation as the cause of soaring wholesale power prices that pushed one of the state's largest utilities, PG&E, into bankruptcy and drove another, Edison International, to the brink.

"Those who suggested that the problem had nothing to do with manipulation turned out to be plain wrong," Mr. Davis said in an interview today. "It's now clear that manipulation was the strategy."

Senator Feinstein said she tried "three or four times" to discuss the state's energy crisis with Mr. Bush last year, but the president refused to meet with her.

"What I wanted to do was communicate those suspicions directly to the president," Ms. Feinstein said tonight.

Instead, Ms. Feinstein said she settled for two meetings with Mr. Cheney as part of large groups — one on March 27, the other on June 12. Both meetings were brief, she said.

"Their attitude was laissez-faire, let the market do what the market does, but it was a broken market," she said.

She said that Mr. Cheney "spoke but did not listen much" during both meetings. "When someone is looking at their watch, it gives you a pretty good idea they want to get out of the room," she said.

A White House spokeswoman, Claire Buchan, said that Mr. Bush had called last May for the Federal Energy Regulatory Commission and the Federal Trade Commission to be vigilant.

"We have always said if anyone is illegally manipulating markets they should be held accountable," Ms. Buchan said. "These documents have been released as part of an ongoing investigation headed by FERC, and the president expects the investigation to be vigorously pursued."

The White House released excerpts of comments made by the president and other administration officials last spring about the White House's commitment to investigate illegal price-gouging.

"We can make sure that any entity will not illegally overcharge," Mr. Bush said on May 15 last year. "And so I'm calling on the F.T.C. to make sure that nobody in America gets illegally overcharged. And we're going to make sure FERC will monitor electricity suppliers to make sure that they charge rates that are fair and reasonable."

Early last year, both Mr. Bush and Mr. Cheney said the problem was largely a result of a flawed deregulation plan adopted by California, and repeatedly declined to call on federal regulators to intervene with price controls.

Bush administration officials contended that the high prices gave incentive to power companies to build power plants, which they said were desperately needed in California.

After the federal agency imposed price controls in late April of last year, Mr. Cheney strongly objected to the approach.

"Price caps are not a help," he said in an interview with The Los Angeles Times. "They take us in exactly the wrong direction."

Mr. Cheney also said that the free market — not additional government regulation — was the answer to the crisis.

"I'm a skeptic," Mr. Cheney said then. "I've never seen price regulations that I've felt very good about. If I had been at FERC, I would never had voted for short-term price caps. But that's their decision. I hope for their sake, and California's, it works."

Both Mr. Davis and Senator Feinstein have said they were disappointed by what they characterized as the lack of vigilance shown by the energy agency during the final year of the Clinton administration. But they also criticized the Bush administration's ties to Enron, which has been the most generous political supporter of the president.

For example, several weeks after Enron's lawyers spelled out the company's strategy for manipulating the California electricity market, Kenneth L. Lay, Enron's chairman, recommended several nominees to the Bush administration for appointment to the energy commission, which is responsible for ensuring "just and reasonable" electricity rates nationwide.

"Everyone gave Enron great deference," Mr. Davis said. "Enron was the mother ship of deregulation. They were given great weight."

Senator Feinstein lamented that she was not given the same access to the president that Enron representatives had.

"Here is a company that was as ribald, as brash, as swashbuckling and as unethical as any company I can possibly conceive of," she said of Enron.

"And they had major access to this administration," she added. "But the senior senator from California can't get in to see them."

[1rudeboy]

Well, then stick around this site. You might learn something about politics.

[lucysmom]

"Yes I do, when such people espouse beliefs that are socialist and counterproductive."

And how does that apply to the topic of this thread?

[Grampa Dave]

Go to this link for another embarassing moment for the lying editors/publishers of the NY Slimes. The Slimes has never printed the truth since they started supporting Lenin in the last century: (NY Slimes, again, caught making the news instead of reporting the news, Or what's new!)

[Steve0113]

And how does that apply to the topic of this thread?

Do you follow the news at all? She wanted federal intervention in the form of price controls and subsidies, both very bad ideas.

[lucysmom]

"Do you follow the news at all? She wanted federal intervention in the form of price controls and subsidies, both very bad ideas."

Not only have I followed the news but have done additional research rather than give knee jerk assent to popular myth. California's request of the Bush administration by Davis and Feinstein was consistant with the FERC mandate.

"When FERC was established in 1977 as a replacement for the Federal Power Commission, its mandate was to determine whether wholesale electricity prices were unjust and unreasonable and, if so, to regulate pricing and order refunds for overcharges to ratepayers."

At the time California requested emergency price caps I went to the FERC web site. A statement declaring that (see above) appeared on their home page (has since been changed).

[d14truth]

"...unjust and unreasonable..."

With government, or the marketplace, as judge?

[d14truth]

Former FERC chair, and Enron lobbyist-- reviving an 'oldie'

DOE Biography-Elizabeth A. Moler

"Under her leadership as the Chair of FERC, the Commission successfully restructured both the interstate natural gas industry and the wholesale electricity industry."

[lucysmom]

"With government, or the marketplace, as judge?"

If a government agency is created to function in an oversight capacity, than it would be the government wouldn't it?

The current spat of business scandals would seem to indicate that the marketplace is not deserving of blind trust just as government is not.

The founding Fathers in their wisdom divided power knowing that too much power in anyone place was corrupting.

[lucysmom]

Here is something else to think about when discussing the marketplace and California deregulation. The rate freeze to consumers utility companies are now weeping and wailing over was imposed at the utility companies request.

"As part of the deregulation deal enacted by the California Legislature in 1996, California's utility companies -- Pacific Gas & Electric Co., Southern California Edison and Dan Diego Gas and Electric -- insisted that residential and small business electricity rates be frozen at 50% above the market price until 2002, in order to allow them to recoup from ratepayers cost overruns, non-economic investments and other management mistakes. Through last June, this enabled the utilities to collect roughly $20 billion in subsidies from ratepayers."

"...The utilities thought wholesale rates would fall, allowing them to enjoy high returns -- and they did make billions of dollars in the early years. Anybody in the utility business knows that when they enter a fixed-price contract they are accepting the risk that their costs will rise. Now, the utilities are trying to get out of the deal...

Isn't part of the free market risk? Enron is being sued by the University of California because the long term contract it made with the University wasn't producing the kind of profits it could make by selling electricity elsewhere and Enron wanted to cancel.

Seems that we are entering an era where giving ones word in making an agreement means nothing.

[d14truth]

"If a government agency is created to function in an oversight capacity, than it would be the government wouldn't it?"

Yes, we agree. However, when the government oversight committee is to be held accountable to the General Accounting Office, and the General Accounting Office hires Arthur Andersen as consultants to assist in the oversight function, we create an oversight to the oversight that creates an unauditable trail, and two more layers of very expensive bureaucracy. It comes down to who deserves our 'trust', and the answer appears to be NO ONE. But, unwilling, or unable, to assume responsibility ourselves, we lean to either business(more Republican) or government(more Democrat) to place our 'faith' in .

I, personally, trust in supply and demand, more than people in power, to be more, not perfectly, equitable. If government is not run as a 'business', it is run into the ground, IMHO, by its 'redistributions' to unprofitable and unproductive sectors.

[d14truth]

"As part of the deregulation deal enacted by the California Legislature in 1996, California's utility companies -- Pacific Gas & Electric Co., Southern California Edison and Dan Diego Gas and Electric -- insisted that residential and small business electricity rates be frozen at 50% above the market price until 2002, in order to allow them to recoup from ratepayers cost overruns, non-economic investments and other management mistakes. Through last June, this enabled the utilities to collect roughly $20 billion in subsidies from ratepayers."

Source, please. I didn't see it on this thread. Thank you.

[d14truth]

The utilities companies expected that an 'intelligent governor' would encourage the building of additional power generators, and they would have spent the $20 billion on the expected 'new' costs. To have the governor approve, and then no one build, due to environmental regs and concerns, again points to 'lack of leadership'.

California voters must either DUMP DAVIS or watch California become "Dump Davis".

[lucysmom]

Wrong again. In the last 10 years 8 small power plants were built, 3 more were permitted and ready to go but the utility companies backed out.

"No power plant applications were filed with the Energy Commission between 1994 and 1997 because there was so much uncertainty during the restructuring of the electricity industry."

Says nothing about environmental regulations there, does it? There is just an unbelievable amount of spin and misinformation on this issue.

I am no fan of Davis, however he was not in office when the plan for deregulation was constructed. He inherited a flawed plan and did not in my opinion handle it well.

There are right now several plants under construction in California and the process takes no longer in California than Texas. That enviornmental stuff is simply not true as any one who bothered to do just a little research would know.

[lucysmom]

"The utilities companies expected that an 'intelligent governor' would encourage the building of additional power generators, and they would have spent the $20 billion on the expected 'new' costs."

What do you supose the utility companies did with that 20 BILLION DOLLARS?

[JoeSixPack1]

And after all that it was a simple twinkle of the eye that saved him from her AK47..:-)

[lucysmom]

I quoted from this site:

http://www.consumerwatchdog.org/utilities/fs/

A google search using the words California AB 1890 rate freeze brings up more than any one would ever want to read on the subject.

[lucysmom]

"I, personally, trust in supply and demand, more than people in power, to be more, not perfectly, equitable. If government is not run as a 'business', it is run into the ground, IMHO, by its 'redistributions' to unprofitable and unproductive sectors.

And as a California rate payer, what would you do while waiting for the market to work? What if you are a small business owner?

As an aside: 20 years ago my parents had solar panels installed to heat their water and supply some heat to the house (it, by the way has operated all this time maintenance free). After the energy crisis their utility bill doubled and they decided to expand on their solar system. Every company they called was booked solid for 6 months and that was just for appointments to come out and give an estimate. Some cities and dairy farms went to generating their own power during this period. I have a feeling that had temporary caps not been put in place, the utility companies would have faced a much reduced demand.

[d14truth]

"And as a California rate payer, what would you do while waiting for the market to work? What if you are a small business owner?"

The 'market always works', and rather quickly when unobstructed. I AM a small busines owner, and between skyrocketing payroll mediCARE/mediCAL costs, mandated insurance costs, and the $6.75 entry level unskilled minimum wage, all of the competitive work we used to be able to do is being done out of country, illegally, or by government sheltered 'workshops'. The socialists in California are bound and determined to make sure nothing but state-dictated capitalism(i.e., fascism) makes up the private sector.

[d14truth]

Consumer Watchdog

Thank you, lucysmom.

[d14truth]

Foundation for Taxpayers and Consumers Rights (CFTR) staff bios

To really get to know about an organization you have got to know the background and history of its staff.

I was fooled for too long by 'Greenpeace', 'People for the American Way', and 'Planned Parenthood' titles not to look for 'warm, fuzzy, organization names being fronts for far left, or far right, 'agendas'.