Davis has been clamoring for such price caps for more than a month, when his own plan to rescue the state's big utilities began crumbling under pressure from energy producers and partisan political bickering. Electricity bills paid by millions of commercial and residential property owners across California have soared by more than 50% since the start of this year, but utilities say they're still losing money because they're paying energy providers several times more than the amount that the utilities themselves can charge consumers.

Bush has said that federally set price caps would make the energy crisis even worse by discouraging companies from investing the hundreds of millions of dollars it takes to build even the smallest of power plants. He reiterated that belief during several public appearances yesterday, as well as in his first face-to-face meeting with Davis--a Democrat who frequently bashed Bush over the course of last year's presidential campaign and may even run against him in the 2004 elections.

"Price caps do nothing to reduce demand, and they do nothing to increase supply," Bush told a mid-morning gathering of business leaders here at the Century Plaza Hotel. Though caps might be politically appealing, he added, they would create "more serious shortages and therefore, even higher prices."

Davis met with Bush for a one-on-one chat that lasted about 20 minutes. A spokesman characterized the discussion as "cordial but firm," adding that neither man budged from his original position.

Davis has said that federal law actually requires that Bush impose limits on the amount that energy providers can charge, in part because the Federal Energy Regulatory Commission has failed to protect consumers by imposing price caps of its own. But that argument was dealt a setback by a federal appeals court yesterday morning, just hours before the governor sat down with Bush.

In a ruling from the 9th US Circuit Court of Appeals in San Francisco, a three-judge panel said the FERC's refusal to institute price caps "does not warrant intervention of this court." A lower court had issued a similar ruling last week, and Davis had supported the appeal.