Power clash in California

Energy summit: Bush, Davis can't agree on relief, but temporary price caps may emerge anyway.

May 31, 2001

CALIFORNIA'S power crisis is no closer to solution, or even temporary relief, after President Bush's tense meeting with Gov. Gray Davis.

The best hope for the nation and its largest state is that lower-profile developments will help as Californians face the nightmare of a scorching summer and soaring power prices.

Mr. Bush offered $150 million emergency aid to pay bills for low-income consumers. But he promised no major relief for the state of 34 million Americans, whose energy prices are 10 times what they were 18 months ago.

The president has no room in his budget to finance large-scale energy-rate relief, given his dual commitment to a balanced budget and a tax cut for all. He continues to call for more conservation and for market demand to expand West Coast power supplies.

Governor Davis, who did nothing to head off the energy crunch in his state, wants federal price caps on wholesale power sold to California. He's suing the Federal Energy Regulatory Commission for price caps, citing the agency's legal duty to ensure "just and reasonable" electricity prices.

Mr. Bush insists that caps don't work and discourage new investment in power plants essential to solve that localized problem.

To a point, he's right. Extensive price caps are a bad idea. They hinder expanded power production, spread shortages and distort supplies.

But temporary price relief may be politically necessary, despite Mr. Bush's convictions and despite California's responsibility for its own power deregulation mess.

FERC endorses a weak plan of wholesale controls for the Pacific region, if only to fend off legal attack. The new Democratic majority in the Senate pledges priority for price-cap legislation. Any price-control relief must be short term. And California must start bending instead of demanding. Continuing subsidies for California risk harm to the rest of the United States.

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