Senate Will Weigh Price Control Issue

California Gov. Gray Davis failed this week to melt President Bush’s opposition to federal price controls on wholesale electricity supplies. But it’s possible that the new Democratic majority in the U.S. Senate could do the job for him.

With Sen. James M. Jeffords of Vermont planning to switch from Republican to independent as early as Tuesday and hand over control of the Senate to the Democrats, Sen. Dianne Feinstein (D-Calif.) hopes to get a speedy vote on a price control bill.

That would be the easy part. Pushing the bill through the Republican-dominated House and dodging a presidential veto would come next.

Still, Democrats feel good about the prospects. Even if they can’t push price controls into law, they hope the pressure will force federal regulators to clamp down more vigorously on price spikes.

Davis spokesman Steve Maviglio said that, as the blackouts continue and higher utility bills begin arriving in the mail, lawmakers will feel increased pressure to support price controls.

“You can bet at every town hall meeting there’s going to be 100 screaming people with their electric bills in hand,” he said.

Davis is particularly encouraged, Maviglio said, by the new-look Senate. The day after meeting with Bush, Davis called the soon-to-be Majority Leader Tom Daschle (D-S.D.) and Sen. Jeff Bingaman (D-N.M.), the incoming chairman of the Energy and Natural Resources Committee, to press his case for price controls.

No commitment has been made on how soon a price control bill will be brought to the Senate floor. But former Sen. J. Bennett Johnston (D-La.), a former chairman of the Senate energy committee hired by the state to lobby for price controls, said he expects the Senate to pass the bill sponsored by Feinstein and Sen. Gordon Smith (R-Ore.).

Some Democrats are already talking about tacking Feinstein’s bill onto any energy legislation that the Republicans favor and Bush would like to sign. The strategy: Force Bush to swallow price controls as the cost of legislation he seeks.

“Everything becomes much more problematic,” a House GOP leadership aide lamented.

In what lobbyists and congressional aides call the likeliest scenario, Democrats will use the threat of price control legislation to pressure the Federal Energy Regulatory Commission to rein in electricity prices more aggressively.

Prices have soared from an average of $31 per megawatt hour in 1999 to $258 by February, with a record of $1,900 during an emergency last month.

“A lot of what they’ve been trying to do with this legislation is not so much change the federal law but encourage greater activity at FERC, greater vigilance,” said Eugene F. Peters, vice president of legislative affairs for the Electric Power Supply Assn., which opposes price controls.

He and others think that the Senate is likely to give FERC and its two new members a “chance to prove themselves.”

“It’s not uncommon in the ways of Washington for legislation to be introduced in order to nudge people to get with the program,” said an aide to a key Democratic senator.

Bingaman said in an interview that he wants FERC to carry out its responsibility to protect consumers from price gouging. But “if Congress needs to pass something to further reinforce that requirement on FERC, we should do it.”

An energy lobbyist said that having FERC act more aggressively would also take political heat off the administration. “The easiest way for the administration to do this is not gulp and say, ‘Mea culpa, we’re now for price controls’ but to have this ‘independent’ agency do it.”

Bush and key congressional Republicans have said price controls would discourage investment in new power plants.

However, Democrats say the legislation would ensure that generators make a profit.

Rep. Bob Filner (D-San Diego), a vocal price control advocate, wants California’s governor to jack up the pressure on California GOP lawmakers by campaigning for price controls in their districts. “It’s not something the governor has ruled out,” Maviglio said. But he said Davis has talked to the state’s congressional delegation until he’s “blue in the face.”

House Republicans appear to be feeling some of the heat already. As of now, only four of the 20 California House Republicans have signed on to price control legislation supported by Democrats.

But some other GOP House members say they are open to price “relief” as long as it isn’t called “controls.” Reps. Doug Ose (R-Sacramento) and Stephen Horn (R-Long Beach), the targets of Democratic ads assailing their records on energy policy, are sponsoring a “price mitigation” bill to expand a FERC order that limits the price that power generators can charge.

The FERC order now applies only when the state’s power supplies slip low enough to trigger an energy emergency. The legislation would expand the order to cover all times of day and cover the entire Western region. But the top price paid for power would still be set by the least efficient generator, providing bigger profits for newer, more efficient generators.

When the House returns to work next week, Republicans and Democrats will resume talks on a price relief amendment to an emergency energy bill designed to help ease California’s power crunch.

The House Energy and Commerce Committee put off a vote on the bill to negotiate with Democrats. “They called us,” Filner said. “They seem to be worried. . . . They need to look like they’re doing something.”

Ken Johnson, spokesman for House Energy Committee Chairman W.J. “Billy” Tauzin (R-La.), said his boss remained opposed to hard caps, “but there are other issues which affect prices he’s willing to consider.” He declined to elaborate.

One compromise under discussion would limit electricity prices until 80% of a wholesaler’s sales were made under long-term contracts, which usually lock in lower, fixed rates. “We hope to continue to talk, but we’re not that close,” said Phil Schiliro, chief of staff to Rep. Henry A. Waxman (D-Los Angeles).

Ultimately, any action that Congress takes to deal with electricity prices could depend on the complex and unpredictable political calculus that can often determine the fate of legislation. How blackouts affect Californians and the economy, whether the political attacks by Democrats on Republicans have any effect, how consumers react to utility bill increases--all these could sway lawmakers.