Western states confront California's spreading crisis

As energy shortage threatens the region, 10 governors met to discuss solutions.

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There's nothing like seeing your neighbor's house ablaze to get you thinking hard about fire detectors and homeowner's insurance. It's with that kind of intensity and urgency that states around California view the current energy emergency in the West.

As the drama over megawatts and rolling blackouts continues, governors across the region are scrambling for short-term fixes and long-term solutions.

"At a time of crisis, all of us want to be good neighbors," says Idaho Gov. Dirk Kempthorne (R), who chairs the Western Governors' Association. And yet self-interest, as much as neighborliness, is involved here.

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Homeowners and businesses in Oregon and Washington face steeply escalating electricity rates and the possibility of shortages. Potato farmers and ranchers in Idaho could be put out of business as the price of tractor fuel and fertilizer becomes prohibitive. Elderly pensioners in Wyoming, now paying as much as $500 a month for heat, could be forced to choose between groceries and staying warm.

High-tech economies

Beyond the immediate threat is apprehension about the future, particularly as the region shifts from resource-based industries to businesses tied to Internet-based activities like financial services, online commerce, and software development.

The past decade has seen the high-tech industry spreading out across the West - nearly 40,000 of Intel's 55,000 employees in the West, for example, are in places like Hillsboro, Ore., and Riverton, Utah. Intel Vice President Jim Jarrett says if the company is forced to reduce energy consumption any further - employees now joke that their cubicles are bathed in "mood lighting" - facilities will have to be closed.

These were among the concerns 10 Western governors brought to a special meeting in Portland, Ore., last Friday. The news was made more serious by reports that snowpacks in Western mountains stand at about half their normal level.

Nobody's calling it a drought yet, but this means hydropower - which many Western states rely on for much of their electrical generation - could be hurting this spring and beyond. It also means that the West faces a potential tradeoff between producing sufficient energy for homes and businesses, having enough water for the streams and lakes that draw vacationers and their wallets, and preserving habitat for endangered species whose protection is required under federal law.

While concern about the availability and price of electrical power is widespread, the situation also presents a clear opportunity for some states.

"Help is on the way!" says Alaska Gov. Tony Knowles (D), whose state contains most of the continent's proven reserves of natural gas. Access to this "fuel of the 21st century," as he calls it, requires fast-track approval of a pipeline from Prudhoe Bay to the lower 48 states.

Likewise, the West has 80 percent of the nation's "clean coal" reserves. With the streamlining of coal mine permitting and siting decisions, this could be a big part of solving the need for more energy sources.

Environmentally minded governors are wary of such talk. "Drilling, digging, and burning are 19th- and 20th-century responses," says Oregon Gov. John Kitzhaber (D). Still, governors here agreed on the need to streamline the regulatory process to allow reactivation of retired power plants, increased production at plants now operating, and building new electricity-transmission facilities.

The strongest point of contention among governors - and between the Bush administration and many political leaders in the West - is over what to do right now about skyrocketing wholesale energy prices.

Battle over price caps

US Rep. Peter DeFazio (D) of Oregon charges power producers with "market manipulation" and "profiteering." Washington State Attorney General Christine Gregoire is investigating possible price manipulation.

Many Western governors - Republicans as well as Democrats - have called for temporary cost-plus price caps on wholesale energy. These would allow reasonable, but not excessive, profits until prices can be stabilized and a long-term solution found.

"We need immediate relief from the exorbitant, unjustified prices that these independent power producers are charging," says Washington Gov. Gary Locke (D). "That's the only way we'll be able to stabilize the situation."

But Bush administration officials toss cold water on such suggestions. Meeting with governors here, Energy Secretary Spencer Abraham expressed "major concern" with price caps, as did Federal Energy Regulatory Commission Chairman Curt Hebert. Even temporary caps would inhibit investment in new generating facilities and lull consumers into thinking they don't need to conserve, they say.

To which Governor Kitzhaber responds: "To say that cost-plus caps will disturb the market ignores the fact that the market is already disturbed."

(c) Copyright 2001. The Christian Science Publishing Society

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