Bush and California The president is wrong to ignore state

Bush and California
The president is wrong to ignore state's electricity woes

May 31, 2001

President George W. Bush’s dismissal of California’s electricity problems may be driven by politics, ideology or both. No matter what is behind it, however, his refusal to help threatens more than just California.

Bush met with California Gov. Gray Davis on Tuesday, but instead of action the president offered only politics and another recital of his misunderstanding of the situation. Neither recognizes the fact that California’s economy both dwarfs and drives the rest of the West.

Gray wants the federal government to impose a temporary price cap on wholesale electric prices. California is now paying as much as $1,900 for a megawatt of electricity that cost $30 two years ago and the resulting flood of red ink threatens both the state and its economy.

Bush’s response is that a cap would do nothing to reduce demand or to stimulate supply. Although true, that misses the point.

The long-term solution to California’s energy needs will involve increasing generating capacity and – regardless of what Vice President Dick Cheney says – promoting conservation. New power plants are already in the works and further incentives to conserve will, we hope, accompany them. In any case, both take time.

What is needed is short-term relief. High electricity prices are not just a symptom of the problem. For now, they are the problem.

A cap would give the state some financial relief, allow time to bring more generating capacity online and stabilize the market for power. Moreover, a cap set high enough would do nothing to curtail supply.

Davis proposes guaranteeing power producers profits of 30 percent or more. A wholesale price at that level would still encourage development of new generating capacity. It might also ease the supply crunch by eliminating the incentive for producers to hold power back in hopes of higher prices.

It is easy to dismiss California’s energy problem as a mess of its own making, and there is some truth to that. The state’s ill-conceived attempt to deregulate electricity is a key part of what went wrong.

It is too much, however, to suggest – as Bush apparently believes – that the problem is California’s alone. California may not be the promised land its boosters used to claim, but it is the most populous and richest state. Its economy is crucial to the West, and the nation.

Put simply, the rest of us cannot afford to let California go broke. Bush should know that.