Bush, Davis Collide Over Energy Policy

President Bush, venturing into California for the first time as president, stood firm Tuesday in his opposition to reining in wholesale electricity prices, prompting Gov. Gray Davis to announce that he likely will sue federal energy regulators within a month.

In their much-anticipated private summit, Bush met with Davis for nearly 40 minutes in what was characterized afterward as a cordial, businesslike session. Davis said Bush offered little to help with California’s energy crisis, while Bush’s aides said Davis’ prescription would worsen the state’s woes.

“He just listened and said he is against price caps,” Davis said.

For his part, the president said in a midday speech to the World Affairs Council in Century City: “My administration will continue to work to help California through the difficult months ahead.”

The president’s first full day in California consisted largely of appearances before friendly audiences. The only discord came at the World Affairs Council luncheon, where three hecklers disrupted his otherwise well-received speech on energy and the economy, and a few dozen protesters gathered outside the Century City hotel.

Davis toned down his harsh rhetoric of recent days, praising Bush for speeding up the process by which the federal government grants permits to new power plants.

The governor said Bush agreed to begin looking into natural gas prices--a step that Davis praised. Natural gas, which fuels virtually all new power plants being built in California and many of the old ones, costs roughly three times more in California than in New York.

The big disagreement remains over the wholesale cost of electricity. The state spent $7 billion on electricity in 1999. The cost could skyrocket to $50 billion this year.

“We have an agreement to disagree, but it is a big disagreement,” Davis said.

The Davis administration has appealed to the Federal Energy Regulatory Commission to impose some type of price controls on electricity. Davis said he expects to sue within a month, if the federal commission turns down the state’s latest petition, which was filed Friday. Also Tuesday, a federal appeals court rejected a lawsuit by state legislative leaders to force Washington energy regulators to cap electricity prices in California.

“I’m going to pursue every recourse possible to me,” Davis said, adding that he also will press his case on behalf of California and other Western states with the newly Democrat-controlled U.S. Senate.

The Bush-Davis meeting was almost twice as long as the 20 minutes allotted on the president’s public schedule. On his first visit to the nation’s most populous state since taking office four months ago, Bush came face to face throughout the day with the reality of the energy crisis and its potential for dragging down the economy of California and the nation.

‘Price Caps Now,’ Heckler Tells Bush

Bush was thrust into the controversy that the crisis has engendered: At the luncheon speech, one woman stood up and shouted, “Price caps now!” and “Stop the greedy generators!” As she was slowly led out, two other women echoed her cries, including one who stated primly, “Excuse me, Mr. Bush, we need price caps.”

Medea Benjamin, a California Green Party candidate for the U.S. Senate last year, was one of the three women ushered out.

Benjamin and 79-year-old Ceil Sorensen were unfurling a banner inside the hotel when they were ushered out, said Donna J. Warren, a Green Party candidate for the 32nd Congressional District seat. The women were released within 30 minutes, Warren said. The president continued his speech, making no reference to the interruptions.

Meanwhile, a group of economists--among them aides to former President Reagan and to Bush’s father--sent Bush a letter opposing price caps, countering another letter from economists delivered by Davis supporting temporary steps to stabilize California’s electricity market.

The president, sounding defensive after coming under attack in a state in which he faces wide skepticism about his policies and his poll numbers are drooping, said in an apparent slap at Davis:

“For too long, too often, too many have wasted energy, pointing fingers and laying blame. Energy is a problem that requires action, not politics, not excuses but action. Blame shifting is not action, it’s a distraction.”

Bush’s day began at dawn in Los Angeles. He flew to Camp Pendleton, where Marines demonstrated their energy conservation efforts. Speaking to an assembly of Marines in front of the 1st Marine Division headquarters, Bush was cheered and greeted with several throaty chants of “hoo-aah” from the approving leathernecks.

After the speech in Los Angeles, he took part in a meeting on energy efficiency and then met with the governor. At the end of the day, he flew to Fresno, for a visit today to Sequoia National Park.

Andrew H. Card Jr., Bush’s chief of staff, said after the meeting with Davis: “It was a very, very friendly and constructive conversation.” Davis described the session as cordial and businesslike.

Card said that the two found areas in which they agreed to disagree, but that there were more areas of agreement.

Card also said Bush told Davis that he had asked Pat Wood, a power utility official in Texas whom he has named to the Federal Energy Regulatory Commission, to visit with the governor to explore the state’s energy problems.

The day had the feel of two intersecting political campaigns.

Bush tried to show that he cared about California’s woes; Davis surrounded himself with “real Californians,” including three young children. The group was handpicked by the governor’s aides to illustrate the effect of rising electricity bills.

“I had hoped [Bush] might have been able to hear the stories directly,” Davis said before his private meeting with the president. He sat on a couch on the 19th floor of the Century Plaza, with three young children, and listened to their parents and others discuss their worries about rising bills and fears about blackouts.

Linking a thriving economy to a reliable, affordable energy supply, Bush said all his work on energy would be guided by this test: “Will any action increase supply at fair and reasonable prices? Will it decrease demand in equitable ways? Anything that meets that test will alleviate the shortage, and we will move swiftly to adopt it.

“Price caps do nothing to reduce demand, and they do nothing to increase supply,” he said, adding that the Clinton administration also opposed such restrictions.

He said they may sound appealing “at first blush for those struggling to pay high energy” bills, but they would bring “more serious shortages.” Critics of price caps argue that they would make production of energy uneconomical and thus discourage exploration for new sources of oil and gas.

In a nod to concerns that energy companies are taking advantage of the shortages, Bush said the federal government “takes very seriously our responsibility to make sure that companies are not illegally gouging consumers.”

Energy Problems Detailed to Media

To the surprise of no one in the Davis administration, Bush did not adjust his schedule to listen to Davis’ Californians with energy problems.

So Davis held a news conference where they could tell their stories, then appeared with them in interviews with reporters from national television networks.

“I’m surprised [Bush] wouldn’t meet with this group, and I’m surprised he’s only giving the governor 20 minutes,” said Gladys Cannon, 75, who has emphysema. “What can you do in 20 minutes, other than say, ‘No.’ ”

Cannon and her husband, Frank, told the governor that they are “on the edge,” living on fixed incomes, and said they fear the effects of blackouts on her respirator. The West Covina woman said she has long been a Davis campaign volunteer.

Gabriel and Christine Rodriguez, owners of Chiquita’s Mexican Restaurant in San Diego, came with their three children, ages 4, 6 and 9, and said they can’t make charitable donations or fill job openings because they are struggling to pay utility bills that have nearly tripled. Christine Rodriguez works for San Diego City Councilman Scott Peters.

Meanwhile, in San Francisco, a three-judge panel of the U.S. 9th Court of Appeals dismissed an urgent suit by Senate leader John Burton and Assembly Speaker Bob Hertzberg, declining to intervene in the growing Washington-California tussle over the energy crisis.

The suit alleged that Californians were suffering “irreparable harm” due to the failure of the Federal Energy Regulatory Commission to fulfill its duty and establish “just and reasonable” wholesale electricity rates. As a result, the suit alleged, the health and safety of Californians were being threatened by frequent power outages.

In rejecting the suit, the judges said the petitioners--Burton (D-San Francisco), Hertzberg (D-Sherman Oaks) and the city of Oakland--”have not demonstrated that this case warrants the intervention of this court.”

Burton and Hertzberg are conferring with their attorneys and have not decided whether to appeal the ruling to the U.S. Supreme Court.

Although the Democratic officeholders failed to persuade the court to force the hand of the federal regulators, a parallel effort to accomplish the same goal is still moving forward.

The California Assembly has directly petitioned the regulatory commission to reconsider an April 26 order that called for limited price controls in the West during power emergencies this summer.

Davis and other state leaders have blasted the order, saying it is full of loopholes and will do little to stop what they consider blatant price gouging by electricity traders.

“California still needs real relief, not the smoke screen federal regulators have offered so far,” Hertzberg said. “The bottom line is that the commission has failed to do its job, which is to protect Californians from runaway wholesale electricity prices.”

*

Times political writer Mark Z. Barabak and staff writer Miguel Bustillo contributed to this story.