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CNN Live Event/Special

Bush, California Governor Meet

Aired May 29, 2001 - 18:25   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.
(JOINED IN PROGRESS)

GOVERNOR GRAY DAVIS (D), CALIFORNIA: ...the California market was dysfunctional. The prices were too high, the term they use was, "unjust and unreasonable," and we are entitled as matter of law for some form of price relief. That could come either in the form of very substantial refunds, or some tempering of the price in the future.

I explained to the president that if he were governor, he, like I, would be doing everything within his power to fight for the 34 million people in California that are getting a raw deal. We paid $7 billion for power in 1999; $27 billion for approximately the same amount of power in 2000.

And even though demand has dropped 8 to 10 percent the first five months of this year, we're looking at spending $50 billion for power in the year 2001. Surely, electricity deregulation is not working. If Californians have to spend 700 percent more for electricity in 2001 than they did in 1999.

So, I'm going to pursue every recourse available to me. We will file a lawsuit against the Federal Energy Regulatory Commission, for failing to discharge its legal obligations. Since 1935 it has had the obligation to insure that markets are functional and rates are just and reasonable. It has found that both conditions are missing. It hasn't provided us any relief.

Secondly, I'm looking forward to working with the newly constituted United States Senate to make sure that the problems of California and the West and conceivably New York City get a full airing, and people understand precisely what's going on.

Now, there was some good news. The president did agree that it made little sense for California to receive Texas natural gas at roughly $15 per British thermal unit when New York is receiving the same gas at roughly $5.95 for British thermal unit. And he wanted his new commissioner Pat Wood to come out to California to talk about that. To see if there's market manipulation and to review the wisdom of the Federal Energy Regulatory's decision two years ago, when they suspended a tariff that controlled the transportation prices of natural gas when it flows from Texas to other parts of the country. So, that was a positive development.

As was the opportunity -- as is the opportunity to meet with Pat Wood who is the president of the Public Utilities Commission in Texas, just a couple of days ago when sworn to the president first appointee to the Federal Energy Regulatory Commission.

I want to conclude by saying, while the president and I have a fundamental disagreement on whether or not California is entitled to price relief, I believe there's no doubt we're entitled to it as a matter of law and the appropriate federal agency has already made the necessary finding to trigger that relief. While we're in disagreement over that fundamental issue, which frankly, all other issues pale in comparison to it, he has been helpful in our efforts to site more power plants.

He's been helpful in seeing that the federal government moves in the same speed the state government is moving, in approving permits. In the 12 years before I was governor, as you know, not a single major power plant was sited in California. During that time, the population grew by 7 million people...

JUDY WOODRUFF, CNN ANCHOR: California Governor Gray Davis holding a news conference, just moments after he finished a meeting with President Bush. He began by thanking the president for the meeting but went on quickly to say that the two men still have a fundamental disagreement over whether California is entitled to some relief over sky high electricity prices.

He said it's not a matter ideology; it's matter of the law. And he cited federal regulatory body that, months ago, said that the prices Californians are being charged "are unjust and unreasonable" and California needs relief.

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