Incoming Senate Leader Daschle Lukewarm on Power Price Caps

Dashing California’s hopes for relief from a reconstituted U.S. Senate, incoming Majority Leader Tom Daschle on Friday all but ruled out passage of federal price controls on soaring electricity costs.

But Daschle indicated that Democrats will hold hearings into the cause of the energy crunch, which has bankrupted California’s biggest private utility, PG&E;, and cost state taxpayers billions of dollars.

“We may have a multitiered, multicommittee analysis of the circumstances through hearings that I think will be very instructive and helpful,” the South Dakota Democrat said in an interview.

The remarks signaled the shifting dynamic in Washington as Democrats prepare to assume control of the Senate for the first time in six years, thanks to the party switch of Sen. James M. Jeffords of Vermont. A Republican, Jeffords will formally switch to independent next week, which will give Democrats a 50-49 advantage over Republicans in the Senate.

One of the most important powers Democrats will assume is the Senate’s investigative function.

In theory, the Senate Democrats would have the power to grill energy executives in much the same fashion that House Democrats years ago browbeat representatives of big tobacco companies.

Democratic lawmakers already plan to investigate the role of oil companies in the nation’s rising gas prices, and Daschle said the probe of the electricity industry could be folded into those hearings.

At the same time, however, Daschle’s pessimism about the chances of imposing wholesale price controls indicates the limits newly empowered Democrats face dealing with a Republican president and a GOP-run House. President Bush and key Republican lawmakers have been adamant in opposing price controls, saying they would only worsen the country’s energy problems.

“We’ve got an uphill battle,” Daschle said.

Even in Democratic ranks, “there are differences of opinion . . . about price caps,” he said.

For now, he added, the swiftest and most likely course of action would be passing legislation ordering the Federal Energy Regulatory Commission to more aggressively rein in electricity costs.

“The possibility of passing price caps is not as great as other options that we could choose,” Daschle said, “especially the one forcing FERC to do its job.”

His remarks are likely to disappoint price-cap advocates who expected a more sympathetic hearing once Democrats took control of the U.S. Senate.

After meeting with Bush on Tuesday and pleading the case for caps, Gov. Gray Davis pointedly told reporters he “looked forward to working with the newly constituted U.S. Senate” to win price relief for California consumers.

Informed of Daschle’s remarks, a Davis spokesman suggested that the incoming Democratic leader could change his assessment, especially given the push for price caps by Sens. Dianne Feinstein (D-Calif.) and Jeff Bingaman (D-N.M.), the incoming head of the Senate Energy and Natural Resources Committee. Feinstein has introduced a price cap bill, which is co-sponsored by Sen. Gordon Smith (R-Ore.).

The bill, which also has the backing of fellow California Democrat Barbara Boxer, would direct FERC to establish rates based on “cost of service” when the agency finds that “unjust and unreasonable” wholesale prices are being charged.

Davis spokesman Steve Maviglio cited the support of Democrats Feinstein and Bingaman and Republican Smith in predicting that support for price controls would multiply.

“I think as summer goes on and more and more states are affected in the Midwest and New England and New York, you’ll hear hue and cry for the caps,” he said.

For her part, Feinstein insisted that she would “go to the wall” in fighting for price caps. After learning of Daschle’s comments, she called the senator and secured a promise that he will make her bill a priority when lawmakers return to Washington next week after their Memorial Day break, she said, adding that he even agreed to sign on as a co-sponsor.

Earlier in the day, however, Daschle had sounded tepid toward the concept of price controls. “I don’t agree with the notion of price caps as the panacea or necessarily as even the first option available to us,” he said.

Rather, Daschle said, it might be preferable to pass legislation forcing federal regulators to use their existing power to protect consumers from price gouging and ensure “just and reasonable prices.”

“I don’t think Congress should dictate what ‘just and reasonable’ is,” he added. “That’s not our responsibility. That’s their responsibility.”

Audio and video excerpts from Friday’s interview with Sen. Tom Daschle are at https://latimes.com/daschle