Davis urges Bush to cap "obscene' power prices

Harriet Chiang, Chronicle Legal Affairs Writer

Monday, May 14, 2001, ©2001 San Francisco Chronicle

URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/14/MN228804.DTL&type=news

In the escalating battle between California and the Bush administration, Gov. Gray Davis warned yesterday that the state faces economic disaster this summer unless the president steps in and imposes a cap on energy prices.

"I don't think we can get through (the summer) without a price cap," Davis said on ABC's "This Week." He said Texas and Southwest energy companies, including "buddies" of President Bush and Vice President Dick Cheney, are charging California "obscenely" high prices in a bid to squeeze every last penny out of the state's shrinking coffers.

"President Bush could solve this problem in five minutes by asking them to impose a price cap," the governor said.

Cheney, charged by Bush with examining the energy problem, has opposed price caps or price regulations, saying they could discourage investment and thus supply.

Davis' charges come at the outset of a week in which the Bush administration is expected to unveil its energy plan, which will emphasize conservation, alternative energy sources and more oil refineries, gas pipelines and nuclear reactors.

The governor has repeatedly called on Bush to rein in the energy companies. But the president, while trying to appear sympathetic, has responded that the power crisis is California's problem and the state has to fix it.

Yesterday, Davis did not rule out the possibility that the state might use its emergency powers to take control of private power plants if electricity prices continue to soar. State Treasurer Phil Angelides on Friday raised the possibility of seizing the power plants.

"I'm not ruling anything in, and I'm not ruling anything out," Davis said.

He said his administration has approved building 14 new plants, including nine that are under construction, four that will be on line this summer and three that will be in operation next summer.

But Davis stressed the need for the federal government to take action, suggesting that energy companies are withholding power to drive up prices.

He singled out Reliant Energy Services, a Texas company he described as a "big buddy" of Bush and Cheney. Last week, Reliant charged the state $1,900 per megawatt hour to buy electricity for about three hours, dramatically higher than the $173 per megawatt hour Davis' financing plan allocated for this summer.

"That is obscene," the governor said. Bush and Cheney "can't just sit back and say 'Hey, it ain't our problem.' "

E-mail Harriet Chiang at hchiang@sfchronicle.com.

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-- Swissrose (cellier3@mindspring.com), May 14, 2001