Federal Order Fuels a California Dispute

Published on

The New York Times

Most sides involved in California’s energy crisis called the decision by federal regulators to place tighter limits on the wholesale price of power a positive if limited step, but its primary impact was to intensify what has become a bitter nationwide battle between Republicans and Democrats.

There is fear that the partisan brawling will only get worse because of a poisonous confluence of factors. A heat wave in Northern California is pushing the state closer to what some have predicted will be regular summer blackouts, though none appear imminent. And rate increases of as much as 40 percent, approved by state regulators earlier this year, will kick in this month, which could make consumers even angrier.

In addition, the United States Senate tomorrow will begin hearings in Washington that are expected to be highly critical of President Bush‘s laissez-faire approach to California’s power problems. Meanwhile, some power generators and Republicans have started running television advertisements here attacking Gov. Gray Davis‘s handling of the situation.

Monday’s decision by the Federal Energy Regulatory Commission fully satisfied no one. It did not place the firm caps on wholesale prices that consumer groups and the governor had demanded, but the new policy will institute the price restraints that President Bush had insisted he would reject.

Some Republicans hinted privately that they felt embarrassed by the policy turnaround because they had been defending the president’s resistance to price controls. But most put the best face on the move and used it to attack Mr. Davis.

“This does, in fact, stabilize the market for a period of time,” said Dave Cox, chairman of the Republican caucus in the State Assembly, “but if we don’t get more generators on line, we’ll just have the same problems again later.”

Mr. Cox said that the move should stop the governor from constantly blaming others for the crisis and that he supported the critical advertisements as political payback for Mr. Davis’s own partisan blasts.

Reliant Energy, a generating company, has reportedly helped finance the advertising campaign, which accuses Mr. Davis of finger-pointing and lacking fresh ideas. Other generating companies were critical but sought to strike an even-handed tone.

Mr. Davis welcomed the price restraints but said the decision would allow prices to stay at historically high levels. He also said it would do little to force the generators to return billions of dollars he claims they have overcharged Californians in previous months.

At the Senate hearing scheduled for tomorrow, Mr. Davis will take the initiative, his advisers said, by demanding that the generators refund as much as $10 billion to California. They also said he would release a report that details all the steps he has taken to relieve the crisis, in contrast to what he has described as Republican inaction.

Consumer groups here were angered by the order, and some called it a sham. Nettie Hoge, who heads The Utility Reform Network, said prices would stall at what were still unjustly high levels. Ms. Hoge described as “an outrage” a 10 percent surcharge that the federal order permits the power generators to charge in California because of questions about the state’s credit worthiness.

“This is the fifth-largest economy in the world,” she said, “and there are no realistic concerns about payment.”

Harvey Rosenfield, president of the Foundation for Taxpayer and Consumer Rights, said that a central weakness of the new federal order was that it relied on flexible price guidelines to be debated between opposing sides — as opposed to hard caps — and thus would only open the door to more political bickering.

“This is really getting kicked into the political realm more than ever now,” Mr. Rosenfield said.

Consumer Watchdog
Consumer Watchdoghttps://consumerwatchdog.org
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

Latest Videos

Latest Releases

In The News

Latest Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Releases