- The Washington Times - Tuesday, January 30, 2001

President Bush said yesterday that California's energy crisis is spreading to neighboring states, and he appointed a high-level task force to find ways to ease the threat.
Vice President Richard B. Cheney led the first meeting of the Cabinet-level task force at the White House yesterday.
The group's goal is to draft legislation and regulations that will speed the development of energy resources, from coal and oil to natural gas, and the pipelines needed to transport it.
"We understand, fully understand, what high energy costs can mean to people in America. We're going to formulate a strategy to deal with it," Mr. Bush said, noting that demand for electricity and natural gas is outstripping supplies and driving up prices in California and elsewhere.
Mr. Bush lauded California for making "progress" in addressing its crisis, with legislators now working on a bill allowing the state to take a big role in providing power in the future and restoring the financial health of its near-bankrupt utilities.
"We're pleased," he said, "because the situation is going to be best remedied in California by Californians."
But the president noted that "the situation in California is beginning to affect neighboring states." Western governors are "deeply concerned" about soaring energy costs in the region that stem from California's huge needs for imported power, he said.
Customers of the Bonneville Power Administration, a giant federal hydroelectric power agency that supplies nearly half the Northwest's power, face a doubling of their electricity bills this year as the facility's power has been drained by a drought and the California crisis.
Arizona Gov. Jane Dee Hull, a Republican, said electricity bills will triple for the customers of one small utility in her state. Oregon lawmakers complain that California is trying to turn their state into an "energy farm" after refusing to allow the building of power plants and facilities in California.
Many small businesses in California from beer factories to dairy farms have had to shut down and lay off workers because their electricity has been cut off under "interruptible" power contracts. The state's utilities have nearly exhausted such "interruptible" contracts in recent weeks as they sought to avoid broader blackouts on all customers.
Outside California, major copper and aluminum producers in Arizona and Washington have shut plants and laid off workers because of the surging costs of electricity and natural gas.
Phelps Dodge Corp., based in Phoenix, cited higher power costs last week in announcing that it may reduce operations at three copper sites in Arizona and New Mexico that employ 2,360 persons.
Washington state's $4.4 billion aluminum industry, led by Spokane's Kaiser Aluminum, creates jobs that pay an average of $59,000 a year. Kaiser warned last week that it could not stay in business under the huge rate increases that Bonneville is contemplating.
A regionwide drought has created a water shortage that is making electricity even scarcer and more expensive. Adding to that, Bonneville must spill enough water downriver this spring to comply with the Endangered Species Act and help protected Columbia River fish make their migration.
Mr. Cheney, who is heading the new energy task force, emphasized that the administration is most concerned about the depressing effect on economic growth.
The vice president noted that the economy has slowed precipitously since the energy crunch started last spring with a gasoline-price spike in the Midwest and, later, a heating oil shortage in the Northeast and the California power shortages.
"We need to deal with trade-offs," he said in an interview with "Fox News Sunday." "We want to protect the environment … but figure out what the right balance is so that we can in fact produce enough energy to meet the needs of a growing economy."
Mr. Bush's energy plan will press for development of oil and gas resources on the outer continental shelf as well as in a small portion of Alaska's Arctic National Wildlife Refuge. But the administration will honor the moratoriums on drilling off the coasts of California and Florida, Mr. Cheney said.
Senate Majority Leader Trent Lott told Fox TV that he is not opposed to lifting the limits on offshore drilling, which is already extensive offshore in Mississippi, Louisiana and Texas.
"Get real. We need the oil and gas. It can be done safely," the Mississippi Republican said. "This, you know, extremism of saying we should have no oil, no coal, no gas, and we're going to do it all by solar and wind it won't work. California is Exhibit A."


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