President George W. Bush certainly put on a fine show of sympathy about Californians’ electrical problems. It’s just that he just can’t seem to do anything very effective — so far.
By any measure, West Coast utilities and their customers are being ripped off. It is simply unconscionable for electricity prices to have jumped to levels five to 10 times what they were a year earlier. The costs are disrupting the budgets of individuals and businesses all along the West Coast. California is on track to spend up to $10.8 billion for electricity in 2001, six times the amount spent last year. The Snohomish County PUD has raised rates 33 percent already this year and is facing a further hike after the Bonneville Power Administration raises its charges for wholesale power later in the year.
Bush’s orders for energy savings at federal facilities can do some good, despite his vice president’s earlier mockery of conservation. Still, cutting use at federal facilities is not enough to bring prices back to earth.
Price controls, President Bush keeps insisting, don’t really work well. In general, that’s quite true. But electric power is anything but a textbook example of a truly free market. Alfred Kahn, the architect of airline deregulation during the Carter administration, and nine other economists made that point in a letter calling on the president to find some middle ground between strict, simplistically calculated price controls and the wide open market.
Because of Bush’s retreat into simplistic answers, though, Sen. Patty Murray and several other senators, including Oregon Republican Gordon Smith, have introduced a bill to require the Federal Energy Regulatory Commission to take action on prices. The commission would be required to limit charges to "just and reasonable" rates. As the economists’ letter notes, that’s exactly what FERC’s charter seems to require it to do.
Construction and conservation will get us out of the power squeeze, over the long run. But that does not excuse sticking consumers with outrageous bills that fatten big corporations. There’s plenty of blame to go around for the electricity shortages that are being exploited by the corporations, and none of the blame belongs to President Bush. But it’s the president’s job to act.
His administration may — finally — be getting the idea. He took the trouble to visit California, if not Oregon and Washington. And his chief political adviser, Karl Rove, now says that the president wants to provide "price relief" through some other means than price controls. If the administration has a better idea, or a fancier name for price controls, fine. Just act.
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