Energy price plunge temporary, experts say
SAN FRANCISCO (AP) – Electricity and natural gas prices may have tumbled last week to the lowest levels in a year, but experts say customers shouldn’t get too comfortable with the idea.
Gov. Gray Davis in a conference call with reporters Sunday said the drop in spot market prices for electricity and natural gas was a ”temporary reprieve,” which he attributed to pressure from Sacramento and Washington.
”We have no power as it relates to pricing other than advocacy, lawsuits, pressure and shame,” Davis said.
Davis was joined in the call with Sen. Joseph Lieberman, D-Conn., and both again urged the Federal Energy Regulatory Commission to cap wholesale electricity prices.
Lieberman, the new chairman of the Senate Governmental Affairs Committee, said he doesn’t support price caps but ”when a free market is not working … then you need price relief.”
Lieberman said he hoped that FERC will cooperate without being compelled through Congressional legislation.
California represents nearly 15 percent of the U.S. economy and letting it ”continue to suffer” an energy crisis could have ”a disastrous impact” on the national economy, Lieberman said.
Lieberman’s committee is holding a June 20 hearing on the matter, and Davis will attend.
Another hearing scheduled for June 13 will include economists and will focus on the effects of energy deregulation in California, Lieberman said.
California has been looking to President Bush for help in the energy crisis, but the White House has steadfastly refused to endorse price caps.
”The president will continue to work with California to address their growing energy needs, but does not want to take action that will make the problem worse, such as price controls,” White House spokeswoman Anne Womack said Sunday.
”The president hopes the planned hearings will be constructive and not partisan,” she added.
The recent decrease in energy costs has been attributed to mild Western temperatures, which has reduced the need to run air conditioners. The reduction in demand has dropped wholesale power prices from more than $500 a megawatt hour to about $50 a megawatt hour.
Natural gas prices fell to about $3.50 per million British thermal units last week from nearly $12 at the California-Arizona border.
The prices also were boosted by an 11 percent decrease in electricity usage by consumers last month compared to a year ago.
”We won’t have conditions like this in a sustained way until 2004 or 2005,” said Michael Shames, executive director of the Utility Consumers’ Action Network in San Diego. ”This is only short-term relief from a broken market.”
Experts said a long heat wave, reduced power from dams in the Pacific Northwest and increased usage of air conditioners could again send energy prices soaring.
”Declaring a victory at this point is a real overstepping,” said Severin Borenstein, director of the University of California Energy Institute in Berkeley. ”We risk consumers easing up on conservation. And if we ease up, this crisis will only get worse.”
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