WASHINGTON --
President-elect George W. Bush on Thursday dismissed the price caps sought by
Gov. Gray Davis as a way out of California's deepening electricity crisis, and
instead proposed relaxing environmental rules that he said keep the state's
power plants from running full tilt.
Bush, in interviews with the Associated Press and
several television networks, signaled that the state will be pretty much on its
own in resolving the roiling crisis that threatens daily life and economic
growth in one of the nation's richest regions.
"It's their law," Bush said in the AP
interview, referring to the state's 1996 deregulation legislation.
"California is going to have to address and correct the law that has caused
some of this to happen."
The president-elect and his chief economic
advisor, Lawrence B. Lindsey, discounted the danger that the state's problems
pose for the national economy. "It remains to be seen how long and severe
the effects will be," Lindsey said in an interview.
The Bush team's assessment of California's problem
squares with that of other politicians, policy makers and independent experts
who believe that the first steps out of the crisis must be taken in Sacramento,
not Washington.
But coming as rolling blackouts darken wide swaths
of the state, it seems certain to provoke comparisons to President Gerald Ford's
refusal to help New York City out of its fiscal morass in 1975, a decision
memorialized by the tabloid headline: "Ford to City: Drop Dead."
And while he is correct that the deregulation law
is of California's own making, many of the environmental regulations that Bush
appeared to be referring to are created by federal, not state, law.
The outcry from state politicians began only
minutes after Bush's remarks were made public Thursday.
"It's one thing to blame California,"
Sen Dianne Feinstein (D-Calif.) said in an interview. "At the same time,
you're going to have people who are going to die. You're going to have
businesses that go out of business.
"For a president to put a thumb in the eye of
the state makes very little long-term sense," Feinstein said. "It is
shortsighted, and it does not show a deep understanding of the issue."
She said she will ask for a meeting with Bush in
an attempt to persuade him to support a temporary price cap on wholesale
electricity prices.
"Why would the new president ignore the
largest, most populous state in the nation?" asked Rep. Anna G. Eshoo
(D-Atherton).
"This crisis threatens the future of high
technology. As a representative of Silicon Valley, I can't understand why
President-elect Bush or the Congress would turn their backs on the industry that
has produced the New Economy."
In Sacramento, Davis portrayed the need for price
caps as one that reaches beyond California's borders. He sought to ally himself
with other Western governors, many of them Republicans.
"Hopefully, as a Western region, we can speak
with one voice about the need to have some adjustment in the wholesale prices
that the utilities in all of our states are absorbing," he said. "We
need, for at least a relatively brief period of time, some reduction in the
wholesale prices to stabilize markets in all the Western states, not just in
California."
Bush's comments, together with those of other top
Republicans, suggest that about the best that California can hope for from the
new administration is what it got under the old one: a willingness by federal
officials to act as mediators in the complex bargaining among the state, its
near-bankrupt utilities and its big power providers.
"To the extent that the federal government
can help California help itself, I will do so, and my administration will do
so," Bush said in an interview with Fox News.
Some of Bush's prescriptions for fixing what ails
California seem calculated to enrage environmentally conscious voters who handed
the state to Democrat Al Gore in the November election.
In the AP interview, Bush said: "California
must be aggressive about increasing the amount of supply of power. We cannot
conserve our way to independence."
And in a separate interview with CNN, he put much
of the blame for the state's problems on strict environmental rules. "If
there's any environmental regulations that's preventing California from having a
100% max output at their plants--as I understand there may be--then we need to
relax those regulations," he said.
Several of the companies that own power plants in
the state have complained that clean-air rules limit how much power they can
generate. Executives at some of those companies--Houston-based Enron, for
example--have close ties to Bush and his advisors.
The clean-air rules Bush appeared to be referring
to are not imposed by state law, however, but by a federal statute--the 1990
Clean Air Act amendments--signed into law by his father as president.
The law sets strict deadlines for every city to
meet health standards for air quality. States have flexibility in how to meet
the targets but can be sued by the federal government or citizens if they fail
to act.
California has moved more aggressively than other
states to comply with the law. But other states that have lagged behind,
including Bush's home state of Texas, are now beginning to impose
California-style regulations in order to meet the deadlines.
In addition to Bush, other GOP officials made
comments likely to upset many Californians.
"The California consumer has to feel the
hit," said Sen. Frank Murkowski (R-Alaska), incoming chairman of the Senate
Energy and Natural Resources Committee. He made his remarks during a
confirmation hearing on Bush's Energy secretary nominee, former Michigan Sen.
Spencer Abraham.
Abraham declined during the hearing to say whether
he would extend the latest order issued by outgoing Energy Secretary Bill
Richardson that has required power provides to sell into the California market.
While some Californians saw political payback in
the president-elect's tough stand on the electrical crisis, independent analysts
said it also reflects an uncomfortable reality: that there is little the federal
government can do to help the state out of the immediate problem.
Even analysts sympathetic to Davis' claims that
power providers have been withholding supply to drive up prices now say it is up
to the state to hammer out a solution.
"The state has to help itself," said
Paul L. Joskow, a Massachusetts Institute of Technology economist who found
indications of price manipulation last summer in a study for Edison. State
officials "have got to deal with the credit problems of the
utilities," he said.
Members of the state's usually activist
congressional delegation have largely let their counterparts in Sacramento try
to solve the crisis--and take the political heat.
But as the lights in California have flickered off
and the two utilities have edged closer to bankruptcy, an increasing number of
the state's Washington representatives have begun pressing for congressional
intervention.
The battle they face was apparent at Thursday's
hearing for Abraham, as lawmakers from other states placed blame for the crisis
squarely on the California.
Sen. Gordon Smith (R-Ore.) said he has received
calls from at least three businesses in his state complaining that their
electricity rates are rising 30% to 40% because of the added demand from
California.
"I think my state is being set up to be an
energy farm for California," he said.
Feinstein warned her colleagues that it would be
irresponsible to ignore California's predicament.
"It's very easy for some to say that
California has been hoisted on its own petard and we can sit back and let them
work it out. I think that is very dangerous," she said.
"The worst possible thing, in my view, is to
allow our two blue-chip utilities to go bankrupt," she said. "It will
have strong ripple effects through the California economy, through the regional
economy, through the national economy and--yes--the international economy."
Suppliers oppose price caps, saying they would
discourage the building of new power plants.
"What California needs to do is open the
doors and say come on in," said Eugene F. Peters, vice president of
legislative affairs for the Electric Power Supply Assn., a Washington-based
trade group. "With price cap legislation, what they're saying is stay
away."
Meanwhile, House Energy and Commerce Committee
Chairman Billy Tauzin (R-La.) announced plans to conduct a "top-to-bottom
review of America's strategic energy policies."
Times staff writers Ricardo Alonso-Zaldivar in Washington and Dan Morain in Sacramento contributed to this report.
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