One of the issues we have been following with respect to the California power 
crisis concerns the role of prospective broader federal involvement in the 
issue post-inauguration.  In the last two days,  we have seen two signals 
suggesting that the Bush Administration will not significantly deviate from 
the "broker" role played by the Clinton White House:

1. In his confirmation hearing this morning, Treasury Secretary-Designate 
O'Neill cautioned that "it is not clear that US intervention is needed in 
California" and that the "Governor must be the first line of defense."

2. A source close to Bush economic advisor Larry Lindsey reported to us 
yesterday that "there was little that the Federal government could do 
specifically to help, beyond focusing on national issues (increased 
production, transmission capacity etc.)."

Of course, the Bush Treasury officials are likely to be more cautious with 
respect to intervention than the Energy team, as was true with the Clinton 
Administration.  Yet Lindsey in particular is unlikely to deviate far from 
the official Bush view at this stage.  Further guidance should be forthcoming 
with respect to this issue from Energy Secretary-Designate Spence Abraham's 
testimony tomorrow.