President Says No to California on Price Caps
Davis suggested that without price controls, California’s energy crisis could throw the state into recession, which could generate economic problems for the rest of the country.
But, prior to the president’s departure, Vice President Dick Cheney, in a speech to the U.S. Chamber of Commerce, called energy price controls “a mistake.”
He stated, “The bottom line… is there isn’t anything that can be done, short-term, to produce more kilowatts this summer.”
On CNN, Commerce Secretary Don Evans reiterated that price controls “just don’t work.”
Bush began his trip to California by visiting Camp Pendleton, where he announced some measures to alleviate the state’s energy crunch. He noted that on May 3, he ordered all federal agencies to take action to conserve energy. “I’m pleased to report that the military and federal agencies are exceeding expectations.”
Camp Pendleton, he said, “deserves special credit” for seeking extra savings over the 10% goal. “Altogether, we estimate that the federal conservation efforts will save the state 76 megawatts per hour during peak use periods… enough electricity for 140,000 people during peak demand periods.”
Bush also said that “Path 15,” the transmission line that connects the power grids of northern and southern California, needs to be expanded and modernized.
“Now we’re taking action to get the job done. Energy Secretary Spence Abraham is speeding approval of the necessary permits and easements. We’re going to unplug the Path 15 bottleneck.”
The president added that, on top of the $300 million in low-income energy assistance in the budget, he will ask Congress for an additional $150 million in aid.
Later in the day, in a speech to the Los Angeles World Affairs Council, Bush specifically addressed the price caps issue, remarking, “Price caps do nothing to reduce demand, and they do nothing to increase supply.”
Bush and Davis then met, taking about twice as long as the scheduled 20 minutes.
In a press conference after their meeting, Davis thanked the president for the opportunity to talk but, “We still, however, have a fundamental disagreement over whether or not California is entitled to price relief.”
He said that the Federal Energy Regulatory Commission (FERC) made a determination late last year that the state’s electricity prices were “unjust and unreasonable.” Therefore, he continued, “We are entitled as a matter of law to some form of price relief.”
Because Bush would not agree to price caps, Davis said, “We will file a lawsuit against the Federal Energy Regulatory Commission for failing to discharge its legal obligations.”
Davis noted that he had a letter from 10 economists supporting his position, but he was unable to sway the president.
Publication date: 06/01/2001