Published on Saturday, May 12, 2001 in the Philadelphia Inquirer
Cheney's Remarks About California Bode Ill for the Nation's Energy Policy
by Matthew Miller
Dick Cheney's stunning remarks the other day to the Los Angeles Times - to the effect that if he were on the Federal Energy Regulatory Commission (FERC), he'd do nothing to repair California's malfunctioning electricity market - amounts to heavy-handed White House jawboning to ignore the law. As such, it gives us our first delicious chance to compare the lawbreaking styles of this White House and the last.
FERC has already acknowledged the obvious: Energy suppliers who have enjoyed tenfold wholesale price hikes in the last year are exercising "market power" in direct violation of federal law, which says that when buyers are effectively held at gunpoint, you can't end up with "just and reasonable" prices. FERC's foot-dragging on fixes has already taken the agency to the edge of lawlessness. Now Cheney has essentially urged the agency to disregard its legal duty altogether.
As with Bill Clinton, of course, one can view Cheney's lawless statements as being offered not out of malice but out of a sincere belief that it's all for the best. But there the parallels end.
Clinton told the country he never took advantage of a troubled young woman. Cheney tells the country he's never seen an energy firm take advantage of a troubled young "spot" market.
Clinton skirted the law because he didn't want the world to know about an affair. Cheney is skirting the law because he doesn't want the world to know that markets are imperfect.
Clinton was deeply embarrassed about the actions that compelled him to lie. Cheney is deeply proud of the convictions that compel him to shun federal regulatory rules.
Clinton's lying about an affair had no impact on consumers - the economy boomed through the entire Lewinsky saga. Cheney's lying about markets could put the California economy in the tank, turning a national slowdown into a full-blown recession.
If left undiscovered, Clinton's perjury about adultery would have benefited himself and hurt no one else.
If left undiscovered, Cheney's regulatory edict would benefit big energy firms whose executives are pals and contributors to Bush-Cheney. It would also wreck the Golden State's budget and doom consumers to blackouts and ripoffs for years.
You can probably tell where I come down on the metaphysical question of whether sins of the flesh matter more than sins of economic ideology. Yet none of this is to let California officials off the hook.
In intelligently deregulated energy markets, the bulk of wholesale energy must (by law) still be sold via long-term contracts at prenegotiated prices. In California's dysfunctional electricity market - for complex and unintended reasons too deadly to detail - these long-term contracts were virtually forbidden. That left nearly every megawatt to be bought and sold in day-to-day "spot" markets that are notoriously volatile and subject to abuse.
This was dumb and has to be fixed; the messy fight now is over how to go about it. But the point is that even smartly deregulated energy markets look nothing like the idealized notion of "free markets" that Cheney has invoked in telling California to drop dead.
If FERC obeys the uberveep's wishes, however, Bush-Cheney contributors stand to make a killing, a portion of which they'll happily rebate to Bush for his 2004 race. I know we Californians didn't support the GOP ticket, but systematically gouging us to generate campaign cash seems a bit extreme as punishment. Still, the longer the White House flouts federal law, the harder it is not to think that's the whole idea.
If Cheney is not corruptly paying off energy cronies, of course, the situation is even scarier. Everyone with a brain who's looked at this situation agrees that FERC is legally obliged to act. Dick Cheney is an extremely smart man. The only alternative to premeditated corruption, therefore, is that Cheney is developing a new national energy policy (not to mention a hundred other things) without bothering to look at the details.
But if Cheney isn't minding the store, then - well, you see how awful it gets, awfully fast.
Copyright 2001 Philadelphia Newspapers Inc