2001 US press briefings
Century Plaza Hotel
Los Angeles, California
3:45 P.M. PDT
MS. BUCHAN: Good afternoon. We'll begin our briefing on the meeting between President Bush and Governor Davis. Joining us will be Karl Rove, who is the Senior Advisor to the President; Robert McNally, who is Special Assistant to the President for Economic Policy; and Gerald Parsky, who is a Californian and the former Chairman of the Bush Campaign here in California.
MR. ROVE: The President and the Governor had a very friendly and constructive series of meetings this afternoon. The President invited the Governor to join him at a meeting with high-tech and business leaders to discuss energy conservation and energy efficiency and technology programs. And then they continued on in a very friendly and very constructive and positive meeting that went well beyond its appointed time.
The President reaffirmed his commitment to helping California in every reasonable way. He reaffirmed his commitment to seeing that federal agencies -- FERC and other agencies, the Federal Trade Commission -- carefully examine questions of illegal price-gouging. And he also discussed briefly the FERC efforts begun several weeks ago to look into the significant and sustained price differentials in transmitting natural gas to California. It's costing significantly more on a sustained basis to transmit, to transfer that gas to California than it is to other locales, some of them even further away.
As I said, it was friendly and positive. They did disagree on one thing -- first of all, I want to say -- agreed on one thing, that California is entitled to price relief. The President believes that it's entitled to price relief in cases of illegal price-gouging by getting refunds and it believes that Californians are entitled to the price relief that will come by having a comprehensive energy policy that encourages more competition, creates more power plants from which power can be drawn, fixes the problems in the transmission network and the transmission grid that are causing some price inefficiencies in the system -- that Californians are entitled to the price relief that we'll get through increased technology, conservation and energy efficiency, and by increased use of alternative energy sources.
Where they disagree is on the question of whether or not California is entitled to a price cap. The President continues his very strong belief that price caps will not add to the supply; in fact, it will diminish the supply. You only need to look at the experience that California had last summer where they had a price cap in place, lowered that price cap, and saw 3,000 megawatts of power flee the state to Arizona and other states where it could be sold. California cannot afford to see 3,000 or 4,000 megawatts of power disappear from the state and be sold outside the state.
But I repeat, the President reiterated his strong commitment to seeing that California gets rate relief, and the way to get rate relief is competition, energy conservation, efficiency, new plants, new sources, alternatives, and very careful oversight by the federal government on these two significant questions of price-gouging and transmission costs.
You saw a little bit of the response that Californians who have been looking at this issue had to the President's position on price caps today in the speech before the LA World Affairs Council and in the meeting with tech and business leaders. They very clearly talked about their desire to avoid the shortages that price caps would bring. Some of the high-tech officials talked about how it would take literally days for them if a plant were set down mid-production line, it would take, literally, days to power the plant back up in an appropriate way. And it would cost them, literally, tens of millions of dollars if that were to happen.
Q The Governor said moments ago that he's still dissatisfied with what the federal government has done so far -- to go through with the procedures when they find out of price- gouging and things like that. Did this come up in the meeting?
MR. ROVE: It came up apparently at the end in an offhand comment by the Governor as the meeting was breaking up. And, of course, California is entitled to do what California wants to do. We think it would be more constructive to focus on those things that will increase the supply and lower the cost. And those are to look at the specific instances of price-gouging, like FERC is committed to doing and is doing, and looking at this transmission issue, and then working on all the fronts to bring on line the power supplies that California needs.