Price Caps Don't Fit in Cheney's Head for Figures
                                            By George Skelton, LA Times

                                                 SACRAMENTO--Want price caps on wholesale electricity to
                                            staunch the bleeding of billions from California? Not going to
                                            happen, Vice President Dick Cheney insists. Don't waste your
                                            energy thinking about it.
                                                 "Frankly, California is looked on by many folks as a classic
                                            example of the kinds of problems that arise when you do use price caps,"
                                            Cheney said in a telephone interview Wednesday.
                                                 The vice president was referring to another type of price
                                            cap--the infamous state cap on consumer rates that has left the
                                            private utilities billions short of enough revenue to pay their gouging
                                            wholesalers. What political leaders in California and the Northwest
                                            are pleading for from the Federal Energy Regulatory Commission is
                                            a regional cap on wholesale prices.
                                                 Early last year, a megawatt-hour was selling wholesale in
                                            California for $30. By year's end, it had risen to an average $300,
                                            according to state officials. At peak, prices have soared to $1,500.
                                            Meanwhile, demand increased last year by less than 4%. In fact,
                                            demand last month was 9% less than in March 2000.
                                                 This is the sorry news for ratepayers/ taxpayers: Californians
                                            paid $7.4 billion for electricity in 1999. This year, the tab--without
                                            price caps--is projected at $70 billion. Gov. Gray Davis disclosed
                                            Tuesday that his administration has been shelling out $73 million a
                                            day to buy electricity for the pauper utilities.
                                                 The profits of power producers--many of them Texans and
                                            Bush backers--have risen 400%-500%-600%.
                                                                    * * *
                                                 But none of this budges the Bush administration.
                                                 Price caps, Cheney declares, may provide "short-term political
                                            relief for the politicians. But they don't do anything to deal with the
                                            basic fundamental problem." That problem is supply, he says; price
                                            caps discourage investment in new power plants and encourage
                                                 Counters Garry South, Davis' political strategist: "The notion by
                                            free market zanies that you have to let profits rise 500%-600% is
                                            ludicrous. Reasonable profits can be made without bankrupting the
                                            system. They're just trying to protect the profits of their friends in
                                            the energy business."
                                                 In truth, California is building power plants as fast as it can. But
                                            not enough new megawatts apparently will be online by summer to
                                            prevent blackouts--and the bleeding of billions more into the
                                            pockets of out-of-state profiteers.
                                                 How about a temporary price cap?
                                                 "Six months? Six years?" Cheney replies. "Once politicians can
                                            no longer resist the temptation to go with price caps, they usually
                                            are unable to ever muster the courage to end them . . .
                                                 "I don't see that as a possibility . . . Any package you can wrap
                                            it in, any fancy rhetoric you can prop it up with, it does not solve
                                            the problem."
                                                                    * * *
                                                 The White House clearly understands it has a problem in
                                            California--a political problem. A problem with a
                                            Democratic-dominated state that voted overwhelmingly for Al
                                            Gore. And now a problem with that mythical headline--Bush to
                                            California: Drop Dead--which seems to be getting bigger each day.

                                                 There have been several recent California: Drop Dead stories.
                                            One was in Sunday's New York Times--"Bush Devoting Scanty
                                            Attention to California." Tuesday, the Sacramento Bee reported
                                            that when Cheney met with Northwest members of Congress to
                                            discuss West Coast energy, he barred Californians from the room.
                                                 Cheney flatly denies it.
                                                 But Sen. Dianne Feinstein (D-Calif.) says she has had trouble
                                            making contact with the Bush White House. She has sent two
                                            letters to President Bush asking for a meeting on energy. The first
                                            time, she got back a form letter with her name misspelled. On the
                                            second try, she got a group meeting with Cheney.
                                                 "It was very disappointing," she says. "He spoke about letting
                                            the free market work and drilling in [Alaska]. That's not going to
                                            help California in the short-term. We need price caps until we're
                                            able to fix this very broken market. . .
                                                 "There seems no interest in really wanting to understand the
                                            California situation."
                                                 I asked Cheney whether he sensed an anti-California bias
                                            across the country? "No more than there's an anti-Texas bias," he
                                            replied. "I wouldn't get paranoid about it.
                                                 "The fact is, California is one of the leading states in the nation.
                                            Often a trendsetter. . . . Well, we hope not to emulate your energy
                                            policy. Hopefully, we'll learn from that."
                                                 His message to California: "There's no reason not to be
                                            optimistic. The energy crunch obviously is a significant problem. . . .
                                            But it too will pass."
                                                 While learning from California, the Bush White House also might
                                            take a refresher course in the free market Hoover administration.

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