Davis may sue Bush to force price controls

LOS ANGELES, California (CNN) -- If President Bush does not agree to impose short-term controls on the price of wholesale electricity in California, Gov. Gray Davis, a Democrat, may announce later Tuesday he will file a lawsuit in federal court against Bush to force action by federal regulatory agencies.

Davis and Bush are scheduled to meet in Los Angeles later Tuesday afternoon to discuss California's energy emergency.

Davis aides point to a federal statute that states the president is required to take action to reduce energy prices if the Federal Energy Regulatory Commission determines that electricity prices are unjust and unreasonable.

VIDEO CNN's Rusty Dornin examines all the finger-pointing in the California power struggle (May 29) Play video (QuickTime, Real or Windows Media)    IN-DEPTH SPECIAL U.S. energy crunch    RESOURCES • Read the Bush energy plan • Details of the plan • Transcript: Bush's energy speech • Major Garrett: Bush's plan    MESSAGE BOARD Discuss the energy crunch    ALSO California pawn business booms as energy bills rise

FERC has already made that determination for California, according to several published orders.

On December 15, 2000, FERC released an order concluding that "there was clear evidence that the California market structure and rules provide the opportunity for sellers to exercise market power when supply is tight, and can result in unjust and unreasonable rates .... [T]herefore, we reaffirm our finding that unjust and unreasonable rates were charged and could continue to be charged unless remedies are implemented."

FERC reaffirmed that finding in an order dated April 26, 2001.

Davis is expected to hold a press conference after his meeting with Bush in which he may announce his intention to file suit. If announced, the filing could come as early as Wednesday.

Davis has repeatedly called for caps on the price of wholesale electricity to get Californians through hot summer months.

Bush has spoken forcefully against price controls, saying such interference in the market will only worsen the problem.

He affirmed that position Tuesday afternoon during in Los Angeles that Davis attended. The two were to meet an hour after the completion of Bush's speech.

"Price controls will result in higher prices," Bush told his audience.

Bush and Vice President Dick Cheney, both former oil executives, have argued that the free market, not price controls, should be trusted to lower energy prices.

Both men have cited California's troubles to support their plans to boost long-term energy supplies, but critics -- including Davis -- say the administration blueprint ignores immediate problems.

Earlier, at the Marine Corps' Camp Pendleton in California, Bush announced the federal government would ask Congress for $150 million to help low-income earners pay for higher energy bills this summer.

"For some Americans and some Californians, high energy costs are more than a challenge, they are an emergency," Bush said. "Our government must respond."

The new money would be allocated in addition to $300 million already budgeted for part of the Low Income Home Energy Assistance Program.

The president spoke at the Marine base to stress his recent order that the military and other federal agencies in California reduce peak-hour power usage by 10 percent.

Camp Pendleton, he said, deserves "special credit."

"I congratulate you for seeking extra conservation savings over the 10 percent. And that's going above and beyond the call of duty," Bush said. "And I salute you."

Bush said the federal conservation efforts would save the state 76 megawatts per hour during peak-use periods. That's enough electricity, he said, for 140,000 people during peak demand periods.