Has Bush Seen The Light?

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For Bush, the beauty of having the nominally independent FERC send an ems team to Granny's house is that it allows him to keep his distance and take credit at the same time--to escape the bind without seeming to try. At a frosty meeting with California lawmakers last week, Cheney repeated his opposition to price controls even as he suggested help from FERC could be on the way. The White House believes in the free market, but it will crow this week that FERC acted because Bush had called on it to be vigilant. "He has not been looking for the short-term political fix but addressing long-term problems," says Gerry Parsky, who chaired Bush's California campaign. "But what he has done is tell FERC to do its job."

Having it both ways requires some semantic gymnastics. FERC draws a distinction between "price caps," which impose a maximum allowable price, and the more flexible "price mitigation," which sets prices based on a formula that factors in producers' costs.

Fair enough. But the White House is taking pains to get its story straight. At a meeting in economic adviser Larry Lindsey's office, aides were told to use the poll-approved "price caps" in place of the harsher "price controls." Republicans on Capitol Hill are thumbing through their thesauruses for other ways to describe the abrupt change of course. To some, the idea of telling their allies in the energy industry to give back their "unearned enrichment" seems more palatable than slapping them for "price gouging." And for those who find "caps" too strong to take, there's always "market mitigation."

But how they spell relief won't matter if FERC's action doesn't work. "It's better than nothing but not nearly as attractive as it sounds," says Davis, who will tell Lieberman's committee the same thing this week. "The way around it is quite obvious. Generators simply sell the product to a middle person--which they do anyway--and that marketer has no obligations under the order." Also, the order will not get back the $7 billion California estimates it has been overcharged by electricity suppliers since last May.

Even if FERC's order proves effective, Republicans will have salvage work to do. Polls show Californians disapprove of how Bush has handled their biggest problem; some even think he's out to get them. Bush and Davis talked past each other during a meeting in Los Angeles last month, when Bush was on his first presidential trip to the state. But real negotiations were under way elsewhere. Sources tell TIME that political adviser Karl Rove met privately with outgoing Republican mayor Richard Riordan to press him to enter next year's race for Governor against Davis. Rove and top Republicans have kept the pressure on, letting Riordan know that Bush moneymen are waiting with checks if he gets in, and sharing G.O.P. polls with him that show Davis may have been fatally wounded by his handling of the crisis. While the Governor claims he inherited the state's deregulation mess, even Democrats accuse him of ignoring it until it was too late. A strong challenge by Riordan could not only unseat the Democratic Governor but also create coattails big enough to keep Republican House members in office.

Californians will be getting a preview of that war this week as a group called the American Taxpayers Alliance begins airing TV ads featuring fuzzy closeups of a robotic-looking Davis, claiming he is to blame for the state's energy problems. Although the A.T.A. styles itself an "issue advocacy group," funding for the ads comes from, among hundreds of other corporations, a major power generator called Reliant Energy, one of the companies California officials accuse of price gouging. (James Baker, who headed the Bush recount effort in Florida, is a director, and chairman Steve Letbetter was a top Bush fund raiser.) Republican sources tell TIME that Scott Reed, the longtime G.O.P. activist who heads A.T.A., hopes to raise $25 million to keep the ads running. Bush outside adviser Ed Gillespie, an Enron lobbyist, is raising a separate $500,000 war chest for ads attacking price caps.

Not that Davis is without resources. He is paying former Al Gore strategists Mark Fabiani and Chris Lehane $30,000 a month of taxpayer money to handle the p.r. crisis inside the energy crisis. That's despite the fact that Fabiani and Lehane--known as "masters of disaster" for their work at the White House during the Clinton scandals--are consultants to Southern California Edison, a utility at the eye of the storm.

California is only part of the G.O.P.'s energy problem. Bush's plan to boost production nationally is in trouble. In mid-April, internal House polls showed the Republicans 3 points behind the Democrats on the question of which party could be trusted more on energy issues. Two weeks ago, they'd fallen to 15 points behind. Republicans fear that will only get worse as Lieberman and two other committee chairmen convene hearings on Bush's energy policies--and his friends in the industry. Both state and federal authorities are probing allegations of market manipulation by a variety of power generators and pipeline operators.

Even if federal regulators take some of the sting out of California's energy prices, tight supplies and high temperatures will ensure that sporadic blackouts continue. It's hard to tell who will have the hotter summer--Californians, their Governor, energy executives or George W. Bush.