Bush Forms Task Force on Supplies

President Bush, worried that California’s electricity troubles are spreading to other states, appointed Vice President Dick Cheney on Monday to head a task force that will look for ways to increase the nation’s energy resources.

The president announced formation of the group after a Cabinet-level meeting at the White House, saying the task force will deal with long-term issues and short-term problems.

But he reiterated his belief that the immediate solution to California’s power woes lies in Sacramento, not Washington.

“It looks like they’re making progress in California, and we’re pleased, because the situation is going to be best remedied in California by Californians,” Bush said after the session.

The administration task force, Bush said, will act “boldly and swiftly” to explore all aspects of national energy policy, including strategies for increasing power supplies, cutting energy costs and reducing U.S. dependence on foreign oil.

Bush said he chose Cheney to head the task force because “he understands what I understand: that if we don’t find more energy supplies to meet the growing demand in places like California, the consumer’s going to pay a dear price.”

“It’s becoming very clear,” Bush said, “that demand is outstripping supply.” He also signaled his intent to press ahead on his campaign pledge to seek congressional approval to open up a portion of the Arctic National Wildlife Refuge to oil drilling.

Bush said Western governors have expressed concern that California’s troubles are spreading. “We’re very aware in this administration that the situation in California is beginning to affect neighboring states,” he said.

The president will dispatch Energy Secretary Spencer Abraham to a meeting of Western governors on the energy crisis Friday in Portland, Ore.

“We’re all being impacted,” said Idaho Gov. Dirk Kempthorne, chairman of the Western Governors Assn. A utility in his state recently spent $120 million to buy electricity, up from $20 million the year before, he said.

Montana Gov. Judy Martz, in a state of the state speech last week urging legislators to craft an energy plan, said she is determined “to steer Montana away from an energy disaster threatening to be exported . . . from California.”

The administration’s task force will consist of Abraham, Treasury Secretary Paul H. O’Neill, Commerce Secretary Don Evans, Agriculture Secretary Ann M. Veneman, Transportation Secretary Norman Y. Mineta, Interior Secretary-designate Gale A. Norton and Environmental Protection Agency chief Christine Todd Whitman.

Bush is focusing on long-term solutions, White House press secretary Ari Fleischer said, “so that his successors and their successors will not be back in the same box that he is in today.”

Abraham last week extended for two weeks a pair of Clinton administration orders requiring out-of-state suppliers to provide electricity and natural gas to California. But the Bush administration has signaled that the orders will not be extended again when they expire at 3 a.m. Washington time on Feb. 7.

In a related development Monday, the Federal Energy Regulatory Commission ordered California’s nearly defunct electricity marketplace to comply with a Dec. 15 order.

One legislative staffer in Sacramento likened the action to “asking a dead man to sit up straight.”

The commission faulted the California Power Exchange for having failed since Jan. 1 to award bids to power sellers based on their actual bids instead of the highest bid received that hour, as the Power Exchange has operated since it opened in March 1998. In its order, the FERC stated that compliance could save California utilities and consumers millions of dollars in electricity costs.

But officials at the Power Exchange, once the digital market where more than 80% of the electricity consumed in California changed hands, said that changing its bid rules to comply with the order could cost $1 million in new software and training at a time when very little electricity is being sold through the exchange.

Power Exchange President George Sladoje said he has tried unsuccessfully since November to get better direction from FERC officials.

“The issue all along has been one of impossibility, not lack of willingness or diligence,” wrote Sladoje to the agency last week.

Power Exchange transactions have dwindled dramatically in recent months as California’s two biggest utilities veered toward bankruptcy. Sellers avoided the market for fear of not getting paid, and Power Exchange officials say they expect to close completely within a few months.

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Simon reported from Washington and Vogel from Sacramento.