- The Washington Times - Wednesday, May 30, 2001

LOS ANGELES — President Bush yesterday told California he will not impose federal price caps on energy costs in the state, asserting that they "do nothing to reduce demand and they do nothing to increase supply."
Gov. Gray Davis, a Democrat who has blamed the president for the states energy woes and says the state is "entitled" to immediate relief, promptly announced he would sue a federal agency in hopes of winning "substantial refunds" for Californians.
In his first visit to a state he lost to former Vice President Al Gore by 1 million votes in the 2000 election, Mr. Bush pointed out his opposition to price caps "was the position of the prior administration" — that of former President Bill Clinton, who twice won California by substantial margins.
"At first blush, for those struggling to pay high energy bills, price caps may sound appealing. But their result will ultimately be more serious shortages and, therefore, higher prices," Mr. Bush said in a speech to the Los Angeles World Affairs Council.
Mr. Davis, accused by Vice President Richard B. Cheney of failing to act for more than a year on signs that an energy crisis was coming, did not take the news well.
"California is entitled to price relief," said Mr. Davis, who hopes to challenge Mr. Bush in 2004. "I dont think its a matter of philosophy or idealogy, its a matter of law."
But Mr. Bush said a short-term fix to a problem that has been brewing for more than a decade and spiraled out of control after California deregulated wholesale energy prices is not the solution.
"All our efforts are guided by a simple test: Will any action increase supply at fair and reasonable prices?" the president said. "Will it decrease demand in equitable ways? Anything that meets that test will alleviate the shortage, and we will act swiftly to adopt it. Anything that fails that test will make the shortage worse.
"We will not take any action that makes Californias problem worse," he said.
The president vowed to make sure no energy company gets away with "illegally gouging consumers" and said the Federal Energy Regulatory Commission (FERC) is acting swiftly toward that end. "My administration is committed to doing our part to help California as it confronts its energy problems."
Mr. Davis had a private 40-minute meeting — twice as long as scheduled — with the president to make his case for price caps.
He said FERC twice made determinations that "the California market was dysfunctional, that prices were too high — the term they used was 'unjust and unreasonable — and we are entitled as a matter of law to some form of price relief."
"That can come in the form of very substantial refunds or some tempering of the price in the future," Mr. Davis said in a press conference.
Mr. Davis said the state spent $7 billion for electricity in 1999, $27 billion in 2000 and is projected to spend $50 billion in 2001.
"Now surely electricity deregulation is not working if Californians have to spend 700 percent more for electricity in 2001 than they did in 1999," the governor said.
In a press conference that interrupted one by Bush chief of staff Andrew Card, Mr. Davis announced he will sue FERC for "failing to discharge its legal obligations."
"Since 1935, it has had the obligation to ensure that markets are functional and rates are just and reasonable. It has found that both conditions are missing; it simply hasnt provided us any relief," he said.
Top Bush aides scrambled to react to the governors actions. As they watched his press conference on television, one said, "Well, thats a legal question, thats a legal question."
A few minutes later, Bush adviser Karl Rove held his own press conference to react to the governors charges and recount the meeting.
"The president reaffirmed … his commitment to seeing that federal agencies, FERC and other agencies … carefully examine questions of illegal price gouging," Mr. Rove said.
Bush officials also said FERC will continue to investigate California prices to determine if there is price gouging, but so far it has determined there have been no illegal activities.
Mr. Card said the president will dispatch a new FERC member, Pat Wood, to visit California and speak with the governor. The chief of staff also said Mr. Davis and Mr. Bush did not discuss the governors suit against FERC.
Meanwhile yesterday, a federal appeals court in San Francisco rejected a suit by the city of Oakland and two Democratic state lawmakers, who had asked the court to order FERC to impose energy price caps.
During the three-day visit to California, few administration officials were as firm as Mr. Cheney on placing the blame for Californias current crisis on California. While Mr. Bush likely cannot count on the states 54 electoral votes in the 2004 election, Bush aides clearly did not want to appear too confrontational over the energy issue.
But at least two Bush aides were miffed by Mr. Davis decision to hold a press conference after his meeting with the president.
"We make time for him and this is how he repays us?" one aide said to another in a hotel elevator.
The governor, who faces re-election next year, has repeatedly charged the Bush administration with ignoring the state, where energy shortages began nearly a year before Mr. Bush took office.
Recent "rolling blackouts" across the northern part of the state have angered many Californians, 60 percent of whom now view the governors job performance as "poor," according to a survey by the Public Policy Institute of California. But 56 percent also say Mr. Bush has not done enough to solve the states energy problems.
Mr. Bush faced his first truly hostile crowd during his Los Angeles speech at the Century Plaza Hotel, where three protesters interrupted Mr. Bush with shouts of "Price caps now" and "Stop the gouging."
The three women were led away by security agents.
Earlier in the day, Mr. Bush traveled to Camp Pendleton, headquarters of the 1st Marine Division, outside San Diego.
There, he proposed adding $150 million to a $300 million budget for the Low Income Home Energy Assistance Program, which helps residents cope with high power bills.


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