OFFICIALS SAY POWER DEREGULATION A BUST
January 30, 2001 11:00 pm

WASHINGTON, D.C. With Californias electricity shortage threatening to raise Oregons power rates, Sen. Gordon Smith, R-Ore., and Rep. Peter DeFazio, D-Springfield, are trying to keep the crisis from crossing the border.

DeFazio has long fought deregulation of the power industry and blames Californias current problems on it.

Because the lights have gone out in California and all the clocks are flashing 12:00, he said Monday at a Salem press conference, Im here to issue a wake up call deregulation is a failure.

Deregulation is scheduled to take effect in Oregon Oct. 1. DeFazio urged the state legislature to halt plans to deregulate the retail energy market.

The Northwest is already in a state of emergency, he said. If Oregon deregulates this fall, it could have catastrophic consequences for our entire region.

He said power shortages, rolling blackouts and high energy rates in California have already resulted in rate hikes and layoffs in Oregon and the rest of the Northwest.

Nothing good can come of deregulation, he said. Northwest consumers need to be protected from rising energy prices and profiteering by private power buccaneers.

DeFazio, co-chairman of the Congressional Northwest Energy Caucus, will introduce a bill this week to re-regulate the energy industry nationwide.

Earlier in the month, DeFazio joined a group of nine Northwest Democrat legislators in asking Californias governor to include Northwest states in finding a solution to the crisis.

Rep. Jay Inslee, D Wash., said, In order to get our help, California should demonstrate that it is conserving more energy, and that it has a financial plan to assure that Northwesterners are paid back, even in the case of bankrupt utilities.

DeFazio and the energy caucus also sent a letter to President Clinton just before he left office, asking that the Northwest be included in any discussions about the energy crisis.

Others disagree with DeFazios opinion that deregulation is to blame.

David Holcberg of the Ayn Rand Institute in Marina del Rey, Calif., put the blame on decades of environmental activism that killed power plant construction.

Angela Eckhardt, program director at the Cascade Policy Institute in Portland, said California never truly deregulated its energy market, but restructured its power industry badly.

Smith introduced a bill last week to amend the Federal Power Act to establish reliability standards for the wholesale transmission system.

The bill would give the Federal Energy Regulatory Commission the power to enforce the new standards.

While my bill will not provide an immediate solution to Californias energy crisis, said Smith, it is imperative that the transmission grid be operated as efficiently as possible during times when the margin between supply and demand is tight.

I believe it is time to separate the issue of electricity reliability from the larger issue of restructuring, said Smith.

The day before, Smith urged executive action from the president to help ease the burden faced by West Coast electricity consumers.

Smith warned that a dry winter could intensify the crisis in a region dependent on hydroelectric power.

He wrote in his letter to the president, I believe there is more that California can and must do immediately to address this situation.

First and foremost, it must approve further electric rate increases. This is necessary to send the right price signals to Californians to conserve energy.

Further, he said, it is also necessary to help Californias investor-owned utilities, which have recently been reduced to junk bond status, from going bankrupt.

In the final weeks of the Clinton administration, he said, Northwest utilities were forced to sell power into California, with no guarantee of being paid.

He said if the California utilities go bankrupt, Oregonians could be stuck with the bill.

For the short term, Smith asked the president for an immediate executive order calling on all federal facilities in the affected 12 western states to conserve electricity for the duration of the crisis.

The order would affect federal office buildings, post offices, military bases and prisons. Smith said governors are already seeking 10 percent energy reductions in state facilities. He asked that federal facilities do the same.

Smith also urged the president and Senate majority leader to increase funding for the Low Income Home Energy Assistance Program, the Weatherization Assistance Program and the State Energy Program.

These programs allow Oregonians with low or fixed incomes to pay for the heating they need to make it through a cold, wet Pacific Northwest winter, said Smith.

I will do everything that I can to ensure that the funds for these programs are increased in next years budget.

Smith also urged Secretary of Energy Spencer Abraham to protect Oregons energy supply from California.

I think that Oregon is being set up to be an energy farm for California, said Smith.

While our reservoirs are being drained, our industries are being put on notice that their rates will go up 30-40 percent because of what is happening in California. Whatever hope they might have had for profits is gone.