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White House rejects call for energy price controls

California governor says state being 'gouged' by energy companies

WASHINGTON (CNN) -- Saying energy companies have "obscenely gouged" his state, California Gov. Gray Davis Sunday called on President Bush to impose temporary price controls to stabilize the price of electricity.

Both GOP lawmakers and the White House responded by rejecting the demand.

In an interview with "Fox News Sunday," Davis singled out an energy company in Texas for selling electricity at high prices. Bush was the governor of Texas before his move to the Oval Office this year.

"Just the other day, we had to pay $1,900 for a megawatt hour, which a year ago would have cost us $30," Davis said. "And the reason this company named Reliant out of Texas gave us for charging us that much money was, they said, the state's credit isn't any good."

Transcript of Bush's radio address (from the White House)
CNN's John King reports on how the Bush administration's energy policy may affect gasoline prices and California's power woes (May 8)

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Davis insisted the state's credit remained strong and called on the administration to step in. "We need help from the federal government to impose some kind of temporary price control, which we used to have, until December of last year, throughout the entire West," he said.

House speaker blasts price controls

Bush and his aides have for weeks rejected the calls for price controls, saying they would only exacerbate the problem. California has been plagued by intermittent rolling blackouts this year, an energy crunch that seems to have been precipitated to a large extent by the state's move into deregulation of the electricity market.

House Speaker Dennis Hastert, R-Illinois, dismissed the California governor's last plea.

"Well, you know, even a freshman in college who is studying economics knows that if you cap the cost of being able to recoup your investment that people who want to invest aren't going to do it," Hastert said on CNN's "Late Edition with Wolf Blitzer." "I think that's a bad remedy for a very, very serious problem."

A White House spokeswoman told CNN, "Price caps will make things worse."

Appearing on CBS's "Face the Nation," Sen. Larry Craig, R-Idaho, agreed.

"Price caps send a negative signal to the investment market," he said.

But some lawmakers, even a few Republicans, have said temporary price controls are needed.

White House to unveil energy policy

Bush is expected to unveil his energy policy this week. Aides have billed it as a balanced plan that will mix conservation with calls for more domestic drilling and less reliance on sources of oil from outside the United States.

But Democrats such as Davis are pressing the White House to take immediate steps to address the rising prices for electricity and gasoline.

California Gov. Gray Davis  

"Today, the president can ask the Federal Trade Commission and the Justice Department to investigate the prices that are outrageous and, particularly, the discontinuity between the record profits of the oil companies," Sen. Joe Lieberman, D-Connecticut, said on CNN. "I looked over the weekend, the top three oil companies in America made more than $10 billion in profits in the first three months of this year -- profits, not gross revenue, while the price was going up.

"You know, the president ought to call in his former colleagues from the oil industry, sit them down at the table, and say, 'Look, this is wrong. Draw a line somewhere. We don't want to have to legislate here, but if you don't charge more reasonable prices, we're going to have to put some kind of price control on.' I think that's a first step."

The White House and some Republicans, meanwhile, are using the energy crunch to build support for a sweeping tax cut. The House and Senate last week approved a budget outline that clears the way for an 11-year, $1.35 trillion tax cut.

"Well, there are a whole lot of reasons to justify the tax cut the president's been advocating. He just made another argument that, in a time of rising energy costs, this will help a vast number of Americans meet those higher costs," Sen. Mitch McConnell, R-Kentucky, said.

Lieberman dismissed that argument.

"I mean, to say that the tax plan is the answer to the skyrocketing gas and electricity and natural gas prices, I mean, it's a little like saying that the tax plan is the answer to ... a mugging in the street," he said. "I mean, because the person who got mugged had money taken away from them will get a little more money in the tax plan. Obviously we want to arrest the mugger, we want to stop muggings. And the tax plan is totally separate."



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