The East Bay Express, in its annual Year In Review issue, has published the most comprehensive summary I've seen yet of how the whole power crisis unfolded. This article makes it clear that, as I have said, prices were driven up by a flawed legal structure for setting spot prices for electricity by a pseudo-aution, rather than by any actual shortage. It also spells out that it was none other than Ken Lay, boss of Enron, who lobbied hardest to create this bogus price-setting mechanism. Apparently former governor Wilson didn't need a whole lot of persuading. It provided a perfect mechanism for instant profits within Enron's own commodities-trading system, which they designed for profiting off of fluctuations in electricity prices. According to this article, the stabilization of prices that followed Governor Davis's long term contracts was the main thing that pulled the rug out from under Enron and sent them into ruin, because they no longer had fluctuations to trade on. It also says that Ken Lay was virtually in charge of the Bush administration's energy policy during the crisis.
The medium through which this price fixing was accomplished was the California Power Exchange. Its removal fixed the most extreme part of the problem, but there are still significant remnants of the defective system in place. We are still vulnerable to more rounds of price gouging any time we aren't protecting ourselves with other measures such as long term contracts.
Ooooh boy, the Enron mess is getting messier and messier. The Big Five accounting firms may become the Big Four once they finish reaming out Arthur Andersen... though I've heard rumors that the other four are no less corrupt. We're learning that Enron had almost a thousand offshore tax shelters, many of them illegal if we only had a way of knowing about them, and that they paid no taxes in most years and got IRS refunds of nine digits. Stories are coming out about how even as Enron collapsed, they still kept writing checks to politicians in places like Sacramento. Most politicians weren't taking the checks any more, probably infuriating the Enron people by how they lacked the integrity to stay bought. (To their credit, some California legislators started sending those checks back as early as 2000.) Republicans are eagerly trying to point out that the Clinton people took comparable amounts of money from Enron to what the current administration has taken... but Clinton didn't let Enron pick half of his cabinet. The republicans are back in the infuriatingly familiar position of trying to defuse or explain away a scandal that none of them can really justify in their own hearts.
I think it is this maddening pattern of getting stuck with big scandals that led some of them to go after Clinton with such over-the-top rage. They saw their chance to finally get a democrat on the receiving end of a Watergate-sized scandal, and time and again their efforts came to nothing because the scandal they dug up, or made up, just wasn't scandalous enough. It just made them madder and madder. The ill-considered impeachment attempt was an outburst of frustration as much as anything else, and that enraged frustration was, I think, what drove them to pursue it to the point where it hurt them more than it hurt Clinton (as they could have seen for themselves if they'd kept cool and rational). And how many of them are now trying desperately to not notice that all the sorts of things they tried to paint the Clintons with are just what the Bushes are routinely guilty of? Hell, if this guy is telling the truth -- and if he is, he's in a position to know -- the Bushes can practically be considered an organized crime family.
The Public Utilities Commission is putting together a proposed plan for how PG&E can resolve its bankruptcy case. PG&E doesn't like the plan one bit... because it asks that PG&E's parent corporation actually spend the extra $5 billion it piled up during the shortage in order to pay off its child company's debts. Heaven forfend that they actually be held accountable for paying money they owe, if they prefer keeping the profits in one pocket and the losses in another.
The PUC says their plan would allow for a decrease in consumer electric rates within a year. PG&E's own proposed plan, on the other hand, is to remove some of the protections that keep them from raising consumer rates further. They would do this by handing over control of such protections to regulators of the Bush administration. Since the Bush administration's energy regulators were apparently more or less appointed by Enron, PG&E probably feels pretty safe in turning to them. That is... if the current officeholders don't get swamped by the widening scandal of Enron's collapse and the crookedness behind it. These regulators are described as "market oriented", which apparently means they see nothing wrong with a private company being entitled to keep all profits while simultaneously sticking somebody else with their losses.
To accomplish their plan, PG&E wants the judge to unilaterally overrule several state laws. Twenty state agencies, led by the attorney general, joined the PUC in urging the judge to put the brakes on this idea. The PUC's lawyers describe PG&E's tactics like this: they haven't even tried to negotiate with the state or their creditors to create a consensus plan to handle their debts, but have instead mounted "a frontal assault on the commission's and the state's regulatory authority."
On another subject -- or rather, the same topic of corporate corruption but with a different company -- I recommend reading this jeremiad by William Rivers Pitt about Enron's ties to the Bush administration, and the extent of Bush's complicity in their criminal misdeeds.
"The trail of influence left by Enron leads also to the scabrous heart ventricles of Vice President Dick Cheney, who admitted recently to six separate meetings with Enron executives while formulating the Bush administration's energy policy. Cheney, a former executive of the Halliburton Petroleum interest, was in charge of creating this policy. For reasons soon to be exposed by subpoena, Cheney refused to detail the specifics of the creation of this policy, which included the multiple Enron meetings. The General Accounting Office was preparing to sue Cheney to reveal this information when the September 11th attacks took place. Those subpoenas may be dusted off and mailed within a month."The article also discusses some unexpected ties between the Bush administration and the Taliban before September 11, in the interest of building a gas pipeline from Turkmenistan to Pakistan -- one that the Clinton administration refused to support because they saw, more clearly than the Bush people did, what kind of regine the Taliban were.
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