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California Governor Pleads for Federal Aid on Energy Prices

Aired May 17, 2001 - 14:45   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LOU WATERS, CNN ANCHOR: And we interrupt Travis Tritt to take you to California, where the governor, Gray Davis, is now responding to George Bush's energy policy, unveiled today.

(JOINED IN PROGRESS)

GOV. GRAY DAVIS (D), CALIFORNIA: ... facing up to America's energy crisis. I agree with him that we need more supply. And that is why, during my two and a half years in office, we have licensed 15 new plants, 10 are now under construction and four will be on-line this summer. That is in sharp contrast to the 12 years that preceded me where not a single major power plant was built in this state.

But I fault the president for not providing California with any immediate relief. California is the only state in America that's faced blackouts and astronomical electricity prices. We are literally in a war with energy companies who are price gouging us. Many of those companies are in Texas.

Mr. President, you didn't create this problem, but you are the only one who can solve it. And with all due respect, Mr. President, Californians want to know whether you're going to be on their side.

Now I do believe conservation is an important part of the message as well. We in this state are now the number one electricity- efficient state. The president this morning said we're number two, but we've now become number one.

Having said that, we're not resting on our laurels, because we can't afford to rest on our laurels. And that's why we have $850 million worth of incentives for savings this summer by individuals and businesses, because it's cheaper for us to pay companies and individuals to adopt energy-saving devices in their homes or businesses than to buy the power we otherwise would have to on the exorbitantly expensive spot market.

So I believe the appropriate response by the president ought to be, "We're going to find a way to give California some relief over the next two years. We know California is building and conserving its way out of this problem, but the prices being charged for energy are literally dragging down our economy and will adversely affect America's economy without some relief soon."

Now I have joined the governors of Oregon and Washington in calling upon the Federal Energy Regulatory Commission for some form of temporary price relief while we get our plants on-line. I would like to note that Texas, earlier this year, adopted a form of price relief where they limited the amount energy producers could bid for energy on their ancillary and reserve power.

That relief runs for two years. So if Texas can have some kind of price relief, I think California is entitled to price relief.

And again, Mr. President, I know you have a lot on your plate, but this issue started well before I became governor. It started well before you became president. And by not doing anything, you're allowing the price-gouging energy companies, many of whom reside in Texas, to get away with murder. And Californians shipped $27 billion out of this state last year for electricity, that's after paying $7 billion the year before. The estimates are this year the cost will range between $50 billion and $60 billion.

Now by doing nothing, that's what's going to happen to Californians. I know you don't want to see that happen. Believe me, I don't want to see that happen. So I'm once again calling on you to find some creative way to give us temporary price relief while our new plants come on-line at which time we will be happy to let the market function.

With that, I want to make just one or two other remarks about QFs. The FERC, Federal Energy Regulatory Commission, ruled yesterday in a way that appeared to give California relief, but again it was another Trojan horse. I had written the Federal Energy Regulatory Commission saying, "Listen, we are negotiating with these qualifying facilities and 90 percent of them are back on-line providing power to us within the constraints of their contractual obligations. Do not give them the opportunity to break those contracts so that we have to pay much more on the spot market for that very same power."

The Federal Energy Regulatory Commission refused to order that the contracts be broken. It's questionable whether they had the power to do it in the first place. But then they said, "All government agencies, however, must expedite the sale of power through the spot market if the qualifying facilities can get a court to invalidate their contract."

So again, they give with one hand and take with another, and are not being helpful. I said to them, "Please read the Hippocratic Oath: First do no harm. If you can't give us price relief, just go home."

With that, I'll be happy to answer any questions.

QUESTION: You make references to Texas energy generators.

DAVIS: Yes, most of them happen to reside in Texas. In all fairness, anybody could have bought our power plants. I could have bought them, you could have bought them, Chevron could have bought them, British Petroleum could have bought them. But the people who bought them just happened to be from the Southwest and most of them happened to reside in Texas.

QUESTION: Are you implying that President Bush is to blame for their behavior in any way?

DAVIS: I thought I made clear that the president didn't create this problem, but he is the only one that can instruct his new appointees to the Federal Energy Regulatory Commission that enough is enough. California has suffered more than any other state by a factor of about 500 percent. Now it is time to give them some form of price relief.

There are many ways it can be done. Just saying, "Over the long haul, everything will work out," is turning a blind eye to the bleeding and hemorrhaging that exist in this state. Small businesses, people running a McDonald's, people running an ice cream shop literally will go out of business because they can't afford these new prices.

There are two things I can do, and one thing the president can do. I can build more plants and we are doing it. No governor has ever built as many as we have. I can encourage more conservation, and with the legislature's help, we have done that. No state is doing more than we are to conserve power.

But I have no legal authority, none, over the price of wholesale energy. The only people who do, since 1935, are the federal government. And he needs, if he wants to be helpful to California, to send a strong signal that the Federal Energy Regulatory Commission should grant California some kind of temporary relief.

WATERS: California's Democratic Governor Gray Davis confronting the problems in his state by not taking the president on directly, but taking issue with the president's long-term energy strategy unveiled earlier today in Minnesota, and taking exception with the president's not providing any relief for California. The governor all but pleading for temporary price relief, saying that he and his state are in a war with energy companies, many of them in Texas, who are price gouging, getting away with murder, as he put it. The prices are dragging down our economy -- California's economy -- and soon will drag down the nation's economy.

More about energy all day long; it's energy day. We'll take a break, we'll continue on with CNN LIVE TODAY in just a moment.

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