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Jewish World Review June 4, 2001 / 14 Sivan, 5761

Debra J. Saunders

Debra J. Saunders
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Consumer Reports

Draw a line in the sand -- THE irony is that while Gov. Gray Davis keeps demanding that President Bush impose wholesale price caps to save his state, Davis has made it easier for Dubya not to.

By the time Davis was ready to take action on the electricity crisis, the only solution he could come up with was to spend his way out of a hole. At his behest, Sacramento started spending the budget surplus -- your tax dollars -- on power. As a result, while big power bills may squeeze some people, TV news broadcasts are not saturated with stories about California businesses receiving business-busting electricity bills and laying off workers to pay PG&E, which makes it easier for Bush to say no to price caps.

Bush is right to say no to price caps. Even if the Federal Energy Regulatory Commission (FERC) were to set price caps, the price caps would apply to less than half the electric market. Municipal utilities, federal power plants and Canadian outfits would be exempt. The Los Angeles Department of Water could still ask $1,400 for a megawatt hour that cost $30 two years before.

So, when the Dems demand price fixing, know that they're not trying to fix the problem. They are trying to shift the blame onto Bushdom.

Too bad Bush had made himself such an easy target. More Californians might get behind him on price caps if they believed that the administration would do something about price gouging.

But Bush can't even look miffed about it. When I asked Veep Dick Cheney in March if there was price gouging, he answered, ""There's no way for me to make a judgment.''

With such tepid rhetoric, it's hard to believe that the administration is doing much about the problem, even though Bush/FERC saw gouging when it ordered suppliers to pay $124.5 million in refunds for overcharging -- which Clinton/FERC never did.

Asked what the administration was doing about gouging, White House spokesman Ken Lisaius recited the litany we've heard before: Tax cuts, $150 million more in assistance for low-income energy consumers, the need to increase supply. Also, Bush told FERC to get tough on ""illegal price gouging.''

They don't get it. FERC should get tough on legal price gouging, too. As Davis electricity czar S. David Freeman noted, ""Even if the action is not criminal, what's happening is a crime.'' Let FERC use its regulatory arsenal to make life difficult for the high rollers.

There's a little thing here called fundamental fairness. As FERC Commissioner William L. Massey noted, when cabbage spikes to $50 per head, people don't buy it and prices drop. That's the market at work. But an economy can't do without electricity, and there is no free market when the state is buying juice for utilities.

Bushdom says the Davis price caps aren't the answer because they don't increase supply. Nonetheless, FERC has ordered very modest price controls to kick in during shortages. This is supposed to stop price spiking.

Freeman says it won't help. If he's right -- hell, even if he isn't -- the president should invite key natural gas providers and other electricity biggies to Washington for a powwow. Let them know that there are limits. Let them know that regulation can be more onerous for bad guys. Draw a line in the sand.

Comment JWR contributor Debra J. Saunders's column by clicking here.


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