July 4, 2002:  The Public Utilities Commission has decided that California utility ratepayers should continue to pay elevated prices for electricity for another year or more, in order to help cover some of the debts that were run up during the price spiral.  But we're not talking about the state's debts, we're talking about PG&E's and SoCalEd's debts to the generating companies that engineered the huge ripoff.

Consumer groups such as TURN are aghast.  Their jaws are dropping in disbelief -- "We must be the only state that is worrying about paying off Enron!"  After all, they point out, it is hardly in doubt any more that the windfall gains made by generating companies were ill-gotten, a result of illegal market manipulation.

The question of how much the generating companies should get is very unsettled.  It may take lengthy court actions to invalidate some of the windfall.  But they won't be getting too much in the meantime -- the money just isn't there, and the amount doled out for now is largely under the control of the judge in PG&E's bankruptcy case.  At this point, I personally have no idea what percentage of the amount they've "earned" has gone unpaid, or whether one company might differ sharply from another in what portion they managed to rake off before the supply of ratepayer revenue ran out.  Whether it's reasonable that they should end up settling for something like 20 cents on the dollar, or whether we shouldn't give them another penny and should sue to get some assets back, is something I'll need more facts and figures to make a guess at.

At least the judge in the PG&E bankruptcy hasn't gone for the absurd greedy arguments that PG&E has put forth, basically asking for every cent of debt to Enron et al to be taken out of the ratepayers.  There are plenty of courts in which we would not be so lucky.  The country has always had a supply of corrupt judges, and the large number of politically partisan right-wing judges that have been appointed through the machinations of the Federalist Society over the last twenty years (including supreme court justices) doesn't help.

(By the way, guess who one of the two founders of the Federalist Society was...  none other than Spencer Abraham, our secretary of energy!  That's right, he earned his cabinet post in part by making a career out of politicizing judicial appointments.  It's thanks to Spencer Abraham and his friends that, for instance, appeals court judges in Washington -- judges active in partisan politics behind the scenes, but quietly so because it's not exactly permissible -- threw out the convictions for the Iran/Contra scandals, and otherwise helped various friends of the GOP with their legal troubles.)

Anyway, this is lucky for us given that one other pro-consumer party to the case, the U.S. Trustee, was just fired by John Ashcroft, apparently for being pro-consumer, as I reported in the June 30 entry.

President Bush is now sounding quite serious about punishing dishonest corporate heads who have undermined investor confidence.  You see, the stock market has been dropping lately like a hawk spotting a rabbit.

The whole idea of all these flimflams was to push expensive stock.  When your company's stock is selling at a high price, the people running the company live a life of ease and luxury, like all the vacuous dot-coms did in 1999.  As long as these methods worked, George W. Bush defended and protected their continued use, and worked to bring us even more deregulation -- which is, in the end, what makes all this possible.  But now that the consequences of this used-car-salesman approach to stock pricing are causing a Dow-Jones tailspin, ol' Dubber has changed his tune.  His goal is exactly the same as it was before -- to get stock prices higher -- but now he's seeing that the only way to do this is, as they say in Washington, to start throwing some of the babies off the back of the sleigh.  Despite this effort to publically attack the problem and restore investor confidence, though, Dub is still quietly dragging his feet on accounting reform, and still strongly opposes any reform of offshore tax shelters.

Meanwhile, as Martha Stewart continues to get the celebrity treatment for her little stock dumping scandalette, it's coming out that George W. Bush has done the same thing, several times.  Of course he has, who's surprised?  In at least one case he apparently pulled a move like the last days of Enron, hyping the continued wonderfulness of the stock even while he was bailing out.  The juiciest part is, the SEC investigated him in 1991, and concluded that he had probably broken the law and had established a pattern of violating their reporting regulations... but then the chair of the SEC, appointed by president George H.W. Bush, killed the investigation!  This spring, Dubya said "Corporate officers should not be allowed to secretly trade their company's stock. Every time they buy or sell, they should be required to tell the public within two days."  Is anyone surprised that his own behavior was the opposite of this?  Bush made millions from the "pump and dump" maneuvers at Harken Energy.  Arthur Andersen was there, helping out with the intricacies of trading various pieces of Harken back and forth between different paper entities... the convolutions of Harken's internal self-dealing were called, by one director, difficult even for industry veterans to grasp, and by another, "a fast numbers game."

Much of this is not new information; plenty of it was publically documented before George W. was elected.  We already knew his career in the oil business consisted mainly of attracting investments without ever bothering to produce any oil revenue to return to investors.  Many of those "investors", in fact, look more like campaign contributors to George the Elder than like people trying to make money in oil.  But I think the SEC investigation story is new.

Bush has said that he filed the correct papers and the SEC "misplaced" them.  Ari Fleischer has now corrected this story: he says that it was a mixup by the lawyers at Harken that led to the papers not being filed.

Another oil scandal, which I had not been aware of, was that Rogelio Montemayor, the head of Pemex (the Mexican national oil company), allegedly flimflammed a contract between Pemex and its unions, and skimmed money out of it for PRI, the political party that kept power in Mexico for 71 years.  The amount of money was enormous by the standards of party politics -- $170,000,000 -- larger than what George W. Bush used to get elected.  Now that PRI has finally been ousted, Montemayor is a wanted fugitive.  He's in Texas, and has turned himself in to a US court, which is trying to figure out whether to extradite him back to Mexico.  I've heard a rumor that this case is somehow tied to Halliburton, but haven't found a connection.

In other news, the California legislature just passed a new automobile emissions law which is the first to regulate greenhouse gas output.  The governor is thinking it over.  The auto industry is threatening to sue, but that's rather outrageous given that the bill is essentially no more than the kind of fuel mileage requirement that the federal government has had for decades.

< Previous Next >