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Sava
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GO GO GO!
Mar 2001
time: 23:30
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Published on Sunday, August 17, 2003 by CommonDreams.org
Ahnuld, Ken Lay, George Bush, **** Cheney and Gray Davis
by Jason Leopold
Arnold Schwarzenegger isn’t talking. The Hollywood action film star and California’s GOP gubernatorial candidate in the state’s recall election has been unusually silent about his plans for running the Golden State. He hasn’t yet offered up a solution for the state’s $38 billion budget deficit, an issue that largely got more than one million people to sign a petition to recall Gov. Gray Davis.
More important, however, Schwarzenegger still won’t respond to questions about why he was at the Peninsula Hotel in Beverly Hills two years ago where he, former Los Angeles Mayor Richard Riordan and junk bond king Michael Milken, met secretly with former Enron Chairman Kenneth Lay who was touting a plan for solving the state’s energy crisis. Other luminaries who were invited but didn’t attend the May 24, 2001 meeting included former Los Angeles Laker Earvin “Magic” Johnson and supermarket magnate Ron Burkle.
While Schwarzenegger, Riordan and Milken listened to Lay’s pitch, Gov. Davis pleaded with President George Bush to enact much needed price controls on electricity sold in the state, which skyrocketed to more than $200 per megawatt-hour. Davis said that Texas-based energy companies were manipulating California’s power market, charging obscene prices for power and holding consumers hostage. Bush agreed to meet with Davis at the Century Plaza Hotel in West Los Angeles on May 29, 2001, five days after Lay met with Schwarzenegger, to discuss the California power crisis.
At the meeting, Davis asked Bush for federal assistance, such as imposing federally mandated price caps, to rein in soaring energy prices. But Bush refused saying California legislators designed an electricity market that left too many regulatory restrictions in place and that’s what caused electricity prices in the state to skyrocket. It was up to the governor to fix the problem, Bush said. However, Bush’s response appears to be part of a coordinated effort launched by Lay to have Davis shoulder the blame for the crisis. It worked. According to recent polls, a majority of voters grew increasingly frustrated with the way Davis handled the power crisis. Schwarzenegger has used the energy crisis and missteps by Davis to bolster his standing with potential voters. While Davis took a beating in the press (some energy companies ran attack ads against the governor), Lay used his political clout to gather support for deregulation.
A couple of weeks before Lay met with Schwarzenegger in May 2001, the PBS news program “Frontline” interviewed Vice President **** Cheney, whom Lay met with privately a month earlier. Cheney was asked by a correspondent from Frontline whether energy companies were acting like a cartel and using manipulative tactics to cause electricity prices to spike in California.
“No,” Cheney said during the Frontline interview. “The problem you had in California was caused by a combination of things--an unwise regulatory scheme, because they didn't really deregulate. Now they’re trapped from unwise regulatory schemes, plus not having addressed the supply side of the issue. They've obviously created major problems for themselves and bankrupted PG&E in the process.”
A month before the Frontline interview and Bush’s meeting with Davis, Cheney, who chairs Bush’s energy task force, met with Lay to discuss Bush’s National Energy Policy. Lay, whose company was the largest contributor to Bush’s presidential campaign, made some recommendations that would financially benefit his company. Lay gave Cheney a memo that included eight recommendations for the energy policy. Of the eight, seven were included in the final draft. The energy policy was released in late May 2001, after Schwarzenegger, Riordan and Milken met with Lay and after the meeting between Bush and Davis and Cheney’s Frontline interview.
The policy made only scant references to California's energy crisis, which Enron was accused of igniting, and did not indicate what should be done to provide the state some relief. Cheney said the policy focused on long-term solutions to the country's energy needs, such as opening up drilling in the Arctic National Wildlife Refuge and freeing up transmission lines. That's why California was ignored in the report, Cheney said.
What’s unknown to many of the voters who will decide Davis’s fate on Oct. 7, the day of the recall election, is that while Cheney dismissed Davis’s accusations that power companies were withholding electricity supplies from the state, one company engaged in exactly the type of behavior that Davis described. But Davis would never be told about the manipulative tactics the energy company engaged.
In a confidential settlement with the Federal Energy Regulatory Commission, whose chairman was appointed by Bush a year earlier, Tulsa, Okla., based-Williams Companies agreed to refund California $8 million in profits it reaped by deliberately shutting down one of its power plants in the state in the spring of 2000 to drive up the wholesale price of electricity in California.
The evidence, a transcript of a tape-recorded telephone conversation between an employee at Williams and an employee at a Southern California power plant operated by Williams, shows how the two conspired to jack up power prices and create an artificial electricity shortage by keeping the power plant out of service for two weeks.
Details of the settlement had been under seal by FERC for more than a year and were released in November after the Wall Street Journal sued the commission to obtain the full copy of its report. Similarly, FERC also found that Reliant Energy engaged in identical behavior around the same time as Williams and in February the commission ordered Reliant to pay California a $13.8 million settlement.
Had the evidence been released in 2001 when Davis accused energy companies of fraud it would have helped California’s case and voters may have viewed the governor more positively. But if FERC were to publicly release the details of the Williams settlement it wouldn't have jibed with Bush's energy policy, which was made public instead in May 2001. It's highly unlikely that Bush, Cheney and members of the energy task force were kept in the dark about the Williams scam, especially since the findings of the investigation by FERC took place around the same time the policy was being drafted.
But Davis was still causing problems for Lay. California’s power woes had a ripple effect, forcing other states to cancel plans to open up their electricity markets to competition fearing deregulation would lead to widespread blackouts and price gouging. For Enron, a company that generated most of its revenue from buying and selling power and natural gas on the open market, such a move would paralyze the company.
Fearing that Davis would take steps to re-regulate California’s power market that Lay spent years lobbying California lawmakers to open up to competition, Lay recruited Schwarzenegger, Riordan, Milken, and other powerful business leaders like Bruce Karatz, chief executive of home builder Kaufman & Broad; Ray Irani, chief executive of Occidental Petroleum; and Kevin Sharer, chief executive of biotech giant Amgen.
The 90-minute secret meeting Lay convened took place inside a conference room at the Peninsula Hotel. Lay, and other Enron representatives at the meeting, handed out a four-page document to Schwarzenegger, Riordan and Milken titled “Comprehensive Solution for California,” which called for an end to federal and state investigations into Enron’s role in the California energy crisis and said consumers should pay for the state’s disastrous experiment with deregulation through multibillion rate increases. Another bullet point in the four-page document said “Get deregulation right this time -- California needs a real electricity market, not government takeovers.”
The irony of that statement is that California’s flawed power market design helped Enron earn more than $500 million in one year, a tenfold increase in profits from a previous year and it’s coordinated effort in manipulating the price of electricity in California, which other power companies mimicked, cost the state close to $70 billion and led to the beginning of what is now the state’s $38 billion budget deficit. The power crisis forced dozens of businesses to close down or move to other states, where cheaper electricity was in abundant supply, and greatly reduced the revenue California relied heavily upon.
Lay asked the participants to support his plan and lobby the state Legislature to make it a law. It’s unclear whether Schwarzenegger held a stake in Enron at the time or if he followed through on Lay’s request. His spokesman, Rob Stutzman, hasn’t returned numerous calls for comment about the meeting. For Schwarzenegger and the others who attended the meeting, associating with Enron, particularly Ken Lay, the disgraced chairman of the high-flying energy company, during the peak of California’s power crisis in May 2001 could be compared to meeting with Osama bin Laden after 9-11 to understand why terrorism isn’t necessarily such a heinous act.
A person who attended the meeting at the Peninsula, which this reporter wrote about two years ago, said Lay invited Schwarzenegger and Riordan because the two were being courted in 2001 as GOP gubernatorial candidates. A week before the meeting, Davis signed legislation to create a state power authority that would buy, operate and build power plants in lieu of out-of-state energy companies, such as Enron, that the governor alleged was ripping off the state.
For Enron’s Lay, the timing of the meeting was crucial. His company was just five months away from disintegrating and he was doing everything in his power to keep his company afloat and the profits rolling in.
It wasn’t until Enron collapsed in October 2001 and evidence of the company’s manipulative trading tactics emerged that FERC began to take a look at the company’s role in California’s electricity crisis. Since then, memos written by former Enron traders were uncovered, with colorful names like “Fat Boy” and “Death Star,” that contained the blueprint for ripping off California.
Enron’s top trader on the West Coast, Timothy Belden, the mastermind behind the scheme, pleaded guilty in December to conspiracy to commit wire fraud and has agreed to cooperate with federal investigators who are still trying to get to the bottom of the crisis.
California is still demanding that FERC order the energy companies to refund the state $8.9 billion for overcharging the state for electricity during its yearlong energy crisis. But FERC says California is due no more than $1.2 billion in refunds because the state still owes the energy companies $1.8 billion in unpaid power bills.
Davis, who refused to cave in to the demands of companies like Enron even while Democrats, Republicans and the public criticized him, was right all along. Maybe Californians ought to cut Davis some slack.
Jason Leopold (jasonleopold@hotmail.com) spent two years covering California's energy crisis as bureau chief of Dow Jones Newswires. He is currently working on a book about the crisis.
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from http://www.commondreams.org/views03/0817-07.htm
interesting developments...
a few interesting facts from this article...
The Energy Crisis in California, or I should say, the massive price gouging that a deregulated system allowed happen; cost the state $70 billion... funny, that's almost twice the amount of the budget shortfall, which everyone is blaming on Gray Davis. Unless of course, you believe D1ck Cheney. 
Schwarzenegger was holding secret meetings with Ken Lay, the ******* who helped mastermind the Enron thefts and the price gouging in California.
And by the way, I bolded the author's credentials for you dopes who will say this is just leftist propaganda. He works for the Dow Jones Newswire... hardly leftist at all.
Is the truth beginning to sink in? 
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MichaeltheGreat
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Apolyton Grand Executioner
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mooning the house that Ruth built.
Oct 1999
time: 21:30
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I wasn't aware that private citizens were required to meet with other private citizens in public?
Or to tell anyone the content of those meetings?
Or that the state of California was buying electricity for everyone?
Or why Bush should have, or how he could have, imposed mandatory price caps, then forced companies to sell to private California utilities at those artificial prices, when other state's utilities were looking for power, including Federal agencies?
Or if the state didn't pay everyone's electric bill, how is that discussion related to Davis' abysmal performance wrt the budget and state management? Especially as two existing state agencies, the California Energy Commision and the California Dept. of Water Resources, plus a third tits-on-a-bull agency created in a panic, the California Power Authority, Cheneyed around so much that they delayed and/or prevented the completion of hundreds of megawatts of new peaking capacity which would have largely broken the market power of the few big players in the market.
So before getting all frothing at the mouth over innuendo, let's get the relevance established first.
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Sava
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GO GO GO!
Mar 2001
time: 23:30
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quote:
Originally posted by MichaeltheGreat
I wasn't aware that private citizens were required to meet with other private citizens in public? |
conspiracy to commit fraud is a crime... personally, I'd like to know who is writing MY energy policies.
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Or to tell anyone the content of those meetings?
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Again... public policy... and as customers, I think Californians would be interested.
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Or that the state of California was buying electricity for everyone?
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The same people are writing America's energy policies.
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Or why Bush should have, or how he could have, imposed mandatory price caps, then forced companies to sell to private California utilities at those artificial prices, when other state's utilities were looking for power, including Federal agencies? |
Sounds reasonable to me that the President should have stopped those companies from stealing from the Californian taxpayers.
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Or if the state didn't pay everyone's electric bill, how is that discussion related to Davis' abysmal performance wrt the budget and state management? Especially as two existing state agencies, the California Energy Commision and the California Dept. of Water Resources, plus a third tits-on-a-bull agency created in a panic, the California Power Authority, Cheneyed around so much that they delayed and/or prevented the completion of hundreds of megawatts of new peaking capacity which would have largely broken the market power of the few big players in the market. |
Did you even read the article? That scam cost California over $70 billion. The budget shortfall is $38 billion. You can do basic arithmetic, right?
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So before getting all frothing at the mouth over innuendo, let's get the relevance established first. |
if you can't see the relevance, seek help... or admit that denial ain't just a river in Egypt my friend. 
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MichaeltheGreat
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Apolyton Grand Executioner
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mooning the house that Ruth built.
Oct 1999
time: 21:30
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quote:
Originally posted by Sava
conspiracy to commit fraud is a crime...
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And if there's any evidence Riordan or Schwarzenegger were involved in the energy business, you'd almost have decent innuendo.
Lay's involvement seems on the evidence to be nothing more than lack of oversight on his fair hair golden boy Fastow. Anyone who met with Fastow, that's a bit worth thinking about. Anyone who met with Lay? Hell, everyone even vaguely related to the energy business met with him at some point or another - he was one of those guru guys who spent more time cruising around talking to people on the outside than he did in his own company. ****ing Hahvuhd Ph.D. econ weenie, but nice enough in that clueless academic way.
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personally, I'd like to know who is writing MY energy policies.
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Go meet some yuppie traders in NYMEX's oil, gas and electricity futures pits then. They have more influence than anyone. Weenie assed bastards.
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Again... public policy... and as customers, I think Californians would be interested.
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Being "interested" doesn't create a right, and an assumption that a public policy issue exists doesn't create one either.
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The same people are writing America's energy policies.
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Really? Who's that? Market conditions write "America's energy policies" assuming such a thing really exists. The term is just a piece of political campaign babble.
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Sounds reasonable to me that the President should have stopped those companies from stealing from the Californian taxpayers.
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So the President of the United States should intervene and fix prices and force private parties to enter into contracts every time one party yells "I'm being picked on?"  Let alone while ignoring the whining party's direct contribution to it's own problems?
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Did you even read the article? That scam cost California over $70 billion. The budget shortfall is $38 billion. You can do basic arithmetic, right?
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I read it, and it's apples and oranges. Where does the 70 billion number come from? Where does the 38 billion? How much of one is represented in the other? Do you think that the state purchases energy for everyone in it, out of the general fund? The state wasn't involved in the energy business out of the general fund, DWR is a non-general fund agency. The utility bail-out bonds were a bullshit move, but an unnecessary move, and nowhere near 70 billion. The state government's total participation in the energy market was far less than 70 billion total, let alone rate increases, let alone market power rate increases, let alone abuse of market power rate increases.
Meanwhile, state agencies continued delaying tactics and inconsistent behavior that limited new entrants to the peak market, and state agencies, municipalities and investor owned utilities continued a two-decade policy of relying on power imports from the rest of the west, while ignoring the in-state load growth and the growth plus drought conditions in California's normal power import sources.
The STATE was so off the wall about the power situation that in 1998 and 1999, they continued to insist (and PG&E and SCE wanted off the hook) on decommisioning Diablo Canyon and San Onofre, and taking over two gigawatts of base load power out of commission.
Meanwhile, wholesale power rates declined from the mid 1980's, and if you add the 2000 price increases into the 1990's averages, the 11 year average wholesale price from 1990 to 2000 was still less than the 1985 prices, largely due to gas deregulation.
So in other words, CRY ME A ****ING RIVER.
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if you can't see the relevance, seek help... or admit that denial ain't just a river in Egypt my friend. |
There is no relevance. Consumer prices for a market commodity are not synonymous with, or connected to, fiscal mismanagement of state government.
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Urban Ranger
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Apolyton Duke of Off-Topic
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quote:
Originally posted by MichaeltheGreat
Or why Bush should have, or how he could have, imposed mandatory price caps, then forced companies to sell to private California utilities at those artificial prices, when other state's utilities were looking for power, including Federal agencies? |
It seems that a lot of people have quite a confused perception of what "the market" is. They somehow think that "the market" magically exists, beyond governments and socieities, and it has got this "invisible hand" that somehow run things optimally. Just like magic, again.
It doesn't work that way. A market is merely a sort of place (either physical or otherwise) where people or other entities such as corporations to exchange goods and services under rules and regulations imposed by the society under which said market operates. Therefore, there's no such thing as a "free" market due to the existence of said ordinances and laws.
As a result, a society or government is already constantly interfering in all the markets under its jurisdiction. Interference is just a matter of degree, as such, a society or government can always impose further regulations as it sees fit, to make sure a market functions properly.
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18-08-2003 08:30
No green house gases, reliable, clean, extremely efficient. The list goes on and on. We should build a half dozen more nuclear plants in the state.
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