ENERGY EXECUTIVES DEFEND PRICE POLICIES TO U.S. SENATE.

Byline: Bill Hillburg Washington Bureau

WASHINGTON - California received a bashing while energy producers denied they were gouging the state Wednesday at a Senate hearing on the state's power woes.

``Go back to your CEOs and tell them please don't price-gouge,'' Sen. Dianne Feinstein told energy executives who testified before the Senate Energy and Natural Resources Committee.

She also characterized energy providers as ``the first industry I've ever seen that doesn't seem to care about people.''

Senators and power officials from other Western states warned that California is in for a long, hot summer punctuated by blackouts. They testified that a drought is already sapping the region's hydroelectric capacity, which has been making up for California's chronic in-state power shortage.

They also cautioned that consumers in other states are not prepared to pay higher rates to keep the lights on in California.

Keith Bailey, president of Oklahoma-based The Williams Cos., which owns several power plants in the Los Angeles area, denied that his firm had been taking unfair advantage of California's deregulated electricity market.

``I take particular offense at charges of price gouging,'' he said. Bailey called Williams' profits ``just a minimal margin and a direct result of short supplies of power and strong demand.''

Bailey and other power executives also testified that consumer rate increases were necessary to spur energy conservation.

Wednesday's witness list also included Wall Street analysts and utility executives, including Steve Frank, president of Southern California Edison, and Steven Klein, Washington lobbyist for Pacific Gas & Electric Co. No consumer groups were invited to testify.

Sen. Frank Murkowski, R-Alaska, the committee chairman, said officials of the Independent System Operator, which runs California's power grid, and the Los Angeles Department of Power and Water had declined invitations to testify.

Murkowski stressed that California's crisis was of its own making and likened the state's woes to the nation's dependence on foreign oil.

``There is a lesson here for the federal government,'' he said. ``What California has taught us is we cannot rely upon others to provide our energy security.''

Feinstein presented a letter from Gov. Gray Davis that outlined California's ongoing effort to unravel its power mess, including streamlining permits for new plants, entering into long-term contracts for electricity and cutting consumer demand.

The state's blueprint drew a lukewarm reception from a Wall Street source, Kit Konolige, managing director of Morgan Stanley Dean Witter. He said it was too early to tell whether the actions would translate into investor confidence in the state's power market or in Edison and PG&E, which are teetering near bankruptcy.