Bush's California Energy Stance Faulted
The New York Times
May 8, 2002
By DON VAN NATTA Jr.
W ASHINGTON, May 7 - Throughout California's energy crisis early last year,
President Bush and Vice President Dick Cheney strongly opposed any government intervention
or price controls intended to rein in the surging costs of
electricity.
Today, two of the most prominent California politicians who called for federal intervention,
Gov. Gray Davis and Senator Dianne Feinstein, both Democrats, reacted with anger at the
release of documents showing that Enron traders had used questionable strategies intended
to increase the company's profits from trading power in the state.
Both Mr. Davis and Ms. Feinstein criticized what they said was the Bush administration's
failure to heed their suspicions that more than just market forces were to blame for the enormous
price increases in wholesale electricity in the state.
They had suspected market manipulation as the cause of soaring wholesale power
prices that pushed one of the state's largest utilities, PG&E, into bankruptcy and drove
another, Edison International, to the brink.
"Those who suggested that the problem had nothing to do with manipulation
turned out to be plain wrong," Mr. Davis said
in an interview today. "It's now clear that manipulation was the strategy."
Senator Feinstein said she tried "three or four times" to discuss the state's energy
crisis with Mr. Bush last year, but the president refused to meet with her.
"What I wanted to do was communicate those suspicions directly to the president,"
Ms. Feinstein said tonight.
Instead, Ms. Feinstein said she settled for two meetings with Mr. Cheney as part
of large groups - one on March 27, the
other on June 12. Both meetings were brief, she said.
"Their attitude was laissez-faire, let the market do what the market does, but it was a
broken market," she said.
She said that Mr. Cheney "spoke but did not listen much" during both
meetings. "When someone is looking at their
watch, it gives you a pretty good idea they want to get out of the room," she said.
A White House spokeswoman, Claire Buchan, said that Mr. Bush had called
last May for the Federal Energy Regulatory
Commission and the Federal Trade Commission to be vigilant.
"We have always said if anyone is illegally manipulating markets they should be
held accountable," Ms. Buchan said. "These documents have been released as
part of an ongoing investigation headed by FERC, and the president expects the
investigation to be vigorously pursued."
The White House released excerpts of comments made by the president and
other administration officials last spring
about the White House's commitment to investigate illegal price-gouging.
"We can make sure that any entity will not illegally overcharge," Mr. Bush said
on May 15 last year. "And so I'm calling on
the F.T.C. to make sure that nobody in America gets illegally overcharged.
And we're going to make sure FERC will
monitor electricity suppliers to make sure that they charge rates that are fair and reasonable."
Early last year, both Mr. Bush and Mr. Cheney said the problem was largely a
result of a flawed deregulation plan adopted by California, and repeatedly declined
to call on federal regulators to intervene with price controls.
Bush administration officials contended that the high prices gave incentive to power
companies to build power plants, which they said were desperately needed in California.
After the federal agency imposed price controls in late April of last year,
Mr. Cheney strongly objected to the approach.
"Price caps are not a help," he said in an interview with The Los Angeles Times.
"They take us in exactly the wrong direction."
Mr. Cheney also said that the free market - not additional government
regulation - was the answer to the crisis.
"I'm a skeptic," Mr. Cheney said then. "I've never seen price regulations that
I've felt very good about. If I had been at FERC, I would never had voted for short-term
price caps. But that's their decision. I hope for their sake, and California's, it
works."
Both Mr. Davis and Senator Feinstein have said they were disappointed by what
they characterized as the lack of vigilance shown by the energy agency during
the final year of the Clinton administration. But they also criticized the Bush
administration's ties to Enron, which has been the most generous political
supporter of the president.
For example, several weeks after Enron's lawyers spelled out the company's
strategy for manipulating the California electricity market, Kenneth L. Lay, Enron's
chairman, recommended several nominees to the Bush administration for
appointment to the energy commission, which is responsible for ensuring
"just and reasonable" electricity rates nationwide.
"Everyone gave Enron great deference," Mr. Davis said. "Enron was the mother
ship of deregulation. They were given great weight."
Senator Feinstein lamented that she was not given the same access
to the president that Enron representatives had.
"Here is a company that was as ribald, as brash, as swashbuckling and as unethical as
any company I can possibly conceive of," she said of Enron.
"And they had major access to this administration," she added. "But the senior
senator from California can't get in to see them."
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