Power outage traced to dim-bulb in the White House

Hamel · Post by **Hamel** » 2003-08-16 06:23pm

The Tale of The Brits Who Swiped 800 Jobs From New York, Carted Off $90 Million, Then Tonight, Turned Off Our Lights

ZNet
Friday, August 15, 2003

by Greg Palast

I can tell you all about the ne're-do-wells that put out our lights tonight. I came up against these characters -- the Niagara Mohawk Power Company -- some years back. You see, before I was a journalist, I worked for a living, as an investigator of corporate racketeers. In the 1980s, "NiMo" built a nuclear plant, Nine Mile Point, a brutally costly piece of hot junk for which NiMo and its partner companies charged billions to New York State's electricity ratepayers.

To pull off this grand theft by kilowatt, the NiMo-led consortium fabricated cost and schedule reports, then performed a Harry Potter job on the account books. In 1988, I showed a jury a memo from an executive from one partner, Long Island Lighting, giving a lesson to a NiMo honcho on how to lie to government regulators. The jury ordered LILCO to pay $4.3 billion and, ultimately, put them out of business.

And that's why, if you're in the Northeast, you're reading this by candlelight tonight. Here's what happened. After LILCO was hammered by the law, after government regulators slammed Niagara Mohawk and dozens of other book-cooking, document-doctoring utility companies all over America with fines and penalties totaling in the tens of billions of dollars, the industry leaders got together to swear never to break the regulations again. Their plan was not to follow the rules, but to ELIMINATE the rules. They called it "deregulation."

It was like a committee of bank robbers figuring out how to make safecracking legal.

But they dare not launch the scheme in the USA. Rather, in 1990, one devious little bunch of operators out of Texas, Houston Natural Gas, operating under the alias "Enron," talked an over-the-edge free-market fanatic, Britain's Prime Minister Margaret Thatcher, into licensing the first completely deregulated power plant in the hemisphere.

And so began an economic disease called "regulatory reform" that spread faster than SARS. Notably, Enron rewarded Thatcher's Energy Minister, one Lord Wakeham, with a bushel of dollar bills for 'consulting' services and a seat on Enron's board of directors. The English experiment proved the viability of Enron's new industrial formula: that the enthusiasm of politicians for deregulation was in direct proportion to the payola provided by power companies.

The power elite first moved on England because they knew Americans wouldn't swallow the deregulation snake oil easily. The USA had gotten used to cheap power available at the flick of switch. This was the legacy of Franklin Roosevelt who, in 1933, caged the man he thought to be the last of the power pirates, Samuel Insull. Wall Street wheeler-dealer Insull created the Power Trust, and six decades before Ken Lay, faked account books and ripped off consumers. To frustrate Insull and his ilk, FDR gave us the Federal Power Commission and the Public Utilities Holding Company Act which told electricity companies where to stand and salute. Detailed regulations limited charges to real expenditures plus a government-set profit. The laws banned power "trading" and required companies to keep the lights on under threat of arrest -- no blackout blackmail to hike rates.

Of particular significance as I write here in the dark, regulators told utilities exactly how much they had to spend to insure the system stayed in repair and the lights stayed on. Bureaucrats crawled along the wire and, like me, crawled through the account books, to make sure the power execs spent customers' money on parts and labor. If they didn't, we'd whack'm over the head with our thick rule books. Did we get in the way of these businessmen's entrepreneurial spirit? Damn right we did.

Most important, FDR banned political contributions from utility companies -- no 'soft' money, no 'hard' money, no money PERIOD.

But then came George the First. In 1992, just prior to his departure from the White House, President Bush Senior gave the power industry one long deep-through-the-teeth kiss good-bye: federal deregulation of electricity. It was a legacy he wanted to leave for his son, the gratitude of power companies which ponied up $16 million for the Republican campaign of 2000, seven times the sum they gave Democrats.

But Poppy Bush's gift of deregulating of wholesale prices set by the feds only got the power pirates halfway to the plunder of Joe Ratepayer. For the big payday they needed deregulation at the state level. There were only two states, California and Texas, big enough and Republican enough to put the electricity market con into operation.

California fell first. The power companies spent $39 million to defeat a 1998 referendum pushed by Ralph Nadar which would have blocked the de-reg scam. Another $37 million was spent on lobbying and lubricating the campaign coffers of the state's politicians to write a lie into law: in the deregulation act's preamble, the Legislature promised that deregulation would reduce electricity bills by 20%. In fact, when in the first California city to go "lawless," San Diego, the 20% savings became a 300% jump in surcharges.

Enron circled California and licked its lips. As the number one contributor to the George W. Bush campaigns, it was confident about the future. With just a half dozen other companies it controlled at times 100% of the available power capacity needed to keep the Golden State lit. Their motto, "your money or your lights."

Enron and its comrades played the system like a broken ATM machine, yanking out the bills. For example, in the shamelessly fixed "auctions" for electricity held by the state, Enron bid, in one instance, to supply 500 megawatts of electricity over a 15 megawatt line. That's like pouring a gallon of gasoline into a thimble -- the lines would burn up if they attempted it. Faced with blackout because of Enron's destructive bid, the state was willing to pay anything to keep the lights on.

And the state did. According to Dr. Anjali Sheffrin, economist with the California state Independent System Operator which directs power deliveries, between May and November 2000, three power giants physically or "economically" withheld power from the state and concocted enough false bids to cost the California customers over $6.2 billion in excess charges.

It took until December 20, 2000, with the lights going out on the Golden Gate, for President Bill Clinton, once a deregulation booster, to find his lost Democratic soul and impose price caps in California and ban Enron from the market.

But the light-bulb buccaneers didn't have to wait long to put their hooks back into the treasure chest. Within seventy-two hours of moving into the White House, while he was still sweeping out the inaugural champagne bottles, George Bush the Second reversed Clinton's executive order and put the power pirates back in business in California. Enron, Reliant (aka Houston Industries), TXU (aka Texas Utilities) and the others who had economically snipped California's wires knew they could count on Dubya, who as governor of the Lone Star state cut them the richest deregulation deal in America.

Meanwhile, the deregulation bug made it to New York where Republican Governor George Pataki and his industry-picked utility commissioners ripped the lid off electric bills and relieved my old friends at Niagara Mohawk of the expensive obligation to properly fund the maintenance of the grid system.

And the Pataki-Bush Axis of Weasels permitted something that must have former New York governor Roosevelt spinning in his wheelchair in Heaven: They allowed a foreign company, the notoriously incompetent National Grid of England, to buy up NiMo, get rid of 800 workers and pocket most of their wages - producing a bonus for NiMo stockholders approaching $90 million.

Is tonight's black-out a surprise? Heck, no, not to us in the field who've watched Bush's buddies flick the switches across the globe. In Brazil, Houston Industries seized ownership of Rio de Janeiro's electric company. The Texans (aided by their French partners) fired workers, raised prices, cut maintenance expenditures and, CLICK! the juice went out so often the locals now call it, "Rio Dark."

So too the free-market British buckaroos controlling Niagara Mohawk raised prices, slashed staff, cut maintenance and CLICK! -- New York joins Brazil in the Dark Ages.

Californians have found the solution to the deregulation disaster: re-call the only governor in the nation with the cojones to stand up to the electricity price fixers. And unlike Arnold Schwarzenegger, Gov. Gray Davis stood alone against the bad guys without using a body double. Davis called Reliant Corp of Houston a pack of "pirates" --and now he'll walk the plank for daring to stand up to the Texas marauders.

So where's the President? Just before he landed on the deck of the Abe Lincoln, the White House was so concerned about our brave troops facing the foe that they used the cover of war for a new push in Congress for yet more electricity deregulation. This has a certain logic: there's no sense defeating Iraq if a hostile regime remains in California.

Sitting in the dark, as my laptop battery runs low, I don't know if the truth about deregulation will ever see the light --until we change the dim bulb in the White House.

Joe · Post by **Joe** » 2003-08-16 06:28pm

Californians have found the solution to the deregulation disaster: re-call the only governor in the nation with the cojones to stand up to the electricity price fixers.

I would be interested to hear how California utilities managed to fix their prices when said prices were kept artificially low as part of the 1996 "deregulation" bill.

Stormbringer · Post by **Stormbringer** » 2003-08-16 09:49pm

Nice. But isn't it a bit too early to be placing blame when we don't even know what happened? And especially on the current President Bush? Now I know you're wanking furiously to that article but wouldn't it make more sense to actually wait for the facts?

Power outages like this happened before, twice as a matter of fact, under a" regulated" market. So why not wait till it we actually know what happened? I mean it's nice to have an article with some pundit pontificating his ass off but there's nothing but theories.

Joe · Post by **Joe** » 2003-08-16 09:54pm

Well, we have a basic idea of what happened. A local failure was not adequately contained and it spread. We just don't know the details.

Patrick Degan · Post by **Patrick Degan** » 2003-08-16 10:13pm

Durran Korr wrote:
Californians have found the solution to the deregulation disaster: re-call the only governor in the nation with the cojones to stand up to the electricity price fixers.
I would be interested to hear how California utilities managed to fix their prices when said prices were kept artificially low as part of the 1996 "deregulation" bill.

Ahem:

It took until December 20, 2000, with the lights going out on the Golden Gate, for President Bill Clinton, once a deregulation booster, to find his lost Democratic soul and impose price caps in California and ban Enron from the market.

But the light-bulb buccaneers didn't have to wait long to put their hooks back into the treasure chest. Within seventy-two hours of moving into the White House, while he was still sweeping out the inaugural champagne bottles, George Bush the Second reversed Clinton's executive order and put the power pirates back in business in California. Enron, Reliant (aka Houston Industries), TXU (aka Texas Utilities) and the others who had economically snipped California's wires knew they could count on Dubya, who as governor of the Lone Star state cut them the richest deregulation deal in America.

As for the details of the market manipulation schemes of Enron et al., those can be found in the company documents now entered into Federal court as prosecution evidence.

Joe · Post by **Joe** » 2003-08-16 10:45pm

I was referring to the retail price controls. One of Enron's strategies actually consisted of buying artificially cheapened California electricity and then selling it in other states where there were no price controls.

Enron did some undeniably sleazy stuff during the power crisis which no doubt caused some overcharging. But certainly not all of it, or even a significant majority of it, because electricity prices were high in the West anyway.

MKSheppard · Post by **MKSheppard** » 2003-08-16 10:54pm

Patrick Degan wrote: As for the details of the market manipulation schemes of Enron et al., those can be found in the company documents now entered into Federal court as prosecution evidence.

Care to quote them verbatim for us or provide links?

I can type out a screed in a few minutes like that.

Joe · Post by **Joe** » 2003-08-16 11:07pm

The documents I can't find, and I'm pretty sure they'd be pretty heavy on legalistic stuff to read anyway.

Here's a link detailing some of what Enron did:

http://login.caida.org/pipermail/politi ... 00023.html

Post by **Coyote** » 2003-08-17 05:35pm

You know, why not just blame the fall of Rome and the Bubonic Plague on the mysterious right wing forces that are responsible for President Bush?

The more he gets painted up as this all-powerful bogeyman that manipulates and string-pulls and is behind every foul deed starts turning him into some sort of Palpatin-esque superman and all you Conspiracy Theory detractors into a bunch of nerdy UFO and Black Helicopter watchers that live in your mom's basement whle wearing Klingon suits.

This stuff starts sounding more and more like the Weekly Worldly News. Alien gives birth to Elvis's Bigfoot love child-- and President Bush is behind it all! If Bush and his minions are this influential, powerful, and almighty, well fuck, we're better off kowtowing to him then, aren't we?

We all know you hate Pres. W. Bush, okay? Sure, whatever, he's evil and singlehandedly responsible for the very existance of the forces of darkness, fine. Maybe next year he'll be gone, okay? Find us a nice candidate to replace him and I'm happy with that. W. Bush is no big deal to me, I am unimpressed by him, but even die-hard Democrats I know today are really underwhelmed by the Dem party's own front runners. Even Dean is drawing lukewarm interest these days.

I'd rather hear about why a particular Dem is better than Bush than just hear complaints about Bush but no alternatives to him.

Patrick Degan · Post by **Patrick Degan** » 2003-08-17 09:57pm

MKSheppard wrote:
Patrick Degan wrote:As for the details of the market manipulation schemes of Enron et al., those can be found in the company documents now entered into Federal court as prosecution evidence.
Care to quote them verbatim for us or provide links?

March 25, 2003, 8:46AM

Only prosecutors know next move

Top Enron leaders not charged so far
By MARY FLOOD and TOM FOWLER
Copyright 2003 Houston Chronicle

The arrest of two relatively unknown Enron executives this month raises hopes that the investigation is moving forward but also raises questions of whether criminal charges will ever reach the top of the corporate ladder.

Of the 12 criminal charges filed in connection with Enron's demise, only seven have been against Enron insiders and only one of those against a big fish -- the 78-count indictment against former chief financial officer Andrew Fastow.

Sixteen months after the company revealed accounting problems that lead to its downfall, a year after a special grand jury was seated and indicted Enron's accounting firm, the question that's being asked in office chatter and at dinner tables throughout Houston is whether executives such as former Chairman Ken Lay, former CEO Jeff Skilling or others will be charged.

"This is like Chinese water torture," said a lawyer familiar with the investigation. "There are all these threats and muscle-flexing from the government, but then nothing much happens."

Only Enron Task Force prosecutors know what will happen, and they can't talk.

"As criminal prosecutors, we must follow the evidence," said Leslie Caldwell, director of the task force, which works primarily in Washington and Houston. "If and when there is sufficient evidence to prove beyond a reasonable doubt that a particular person engaged in criminal conduct, that person will be prosecuted."

But the media and political attention focused on Enron have made the prosecutors' silence awkward, said Jacob Frenkel, a former federal prosecutor and Securities and Exchange Commission lawyer in Washington.

"Now the public is looking for senior officials' heads in nooses," Frenkel said. Public satisfaction may depend on how many people are charged, but prosecutors say they need quality evidence to make charges, he said.

There are several reasons top executives like Skilling and Lay may not have been charged, say observers of the case.

The most obvious one is that they are not guilty of any criminal wrongdoing and prosecutors have simply not found evidence against them, even though they may still be looking.

Or, it could be prosecutors have enough to make a case but are seeking more evidence for a broad charge against several people and possibly the company itself.

The public likely won't know until charges are filed or the task force disbands.

Skilling and Lay have consistently said they committed no crimes. And Lay's lawyers have publicly stated they have supplied prosecutors with evidence of his innocence.

Dan Hedges, a former U.S. attorney in Houston now practicing as a defense lawyer, said he expects the last decision prosecutors will make is whether or not to charge Skilling or Lay.

"One view, which is not necessarily right, is that the more time that goes by, the chances of them being indicted becomes less. But the cases against these two guys are so important and potentially so complex that they literally could be the last thing that happens," said Hedges, who has no Enron-related clients.

The grand jury has heard from many witnesses about Lay's stock sales and use of Enron stock options to repay millions in loans from the company. Lay's children, his personal staff, financial adviser and even members of Enron's board have testified. That could indicate a buildup to an indictment, but it could also indicate prosecutors are thoroughly investigating every possibility before deciding to drop it.

A recent New York Times story indicated Lay may have a good defense against an insider trading charge. But his lawyers would not provide the Chronicle any documentation of Lay's finances and would not comment for this story.

Prosecutors have not abandoned looking at Lay, however, and as recently as this month have questioned people about Lay's loans. The government lawyers could also be looking at other fraud-related charges against Lay or Skilling -- relating to anything from presentations to the Enron board to public statements about asset values.

Several lawyers involved in the case believe that is what prosecutors are doing but also note that a built-in defense might come if Lay or Skilling had credible legal advice backing up their actions.

The investigation into Enron Broadband Services has been seen as a pathway to charges against Skilling. For months a task force prosecutor has threatened, not cajoled, people involved in Enron Broadband, asking about the reliability of the technology behind the business and how executives, including Skilling, represented the business to investors and analysts.

But only two charges have been filed, against midlevel former Enron Broadband executives Kevin Howard and Michael Krautz over the propriety of a side deal involving Blockbuster Video. Two higher-ups in the broadband section were mentioned by their titles in the charges, but prosecutors did that in October with another Enron executive who has still not been charged.

Bruce Hiler, Skilling's Washington, D.C.-based lawyer, said he won't comment on the investigation.

"I have no idea what the prosecutors will do in this case," said another lawyer familiar with the task force's work. "They've gone about some of this in a strange way." He cites the prosecutors' penchant for making the case twice by filing charges, through which they can supply the media juicy details, then taking the same case for a grand jury indictment.

Certainly these prosecutors have followed a classic pattern of trying to turn people down the food chain into informants who help them make cases against those further up. But the efforts haven't borne public fruit, except for the case against Fastow, who was clearly implicated by his protégé Michael Kopper. Kopper pleaded guilty and cooperated with the government.

There are no signs Fastow is going to turn against Skilling and Lay, and it's possible they will avoid charges.

To make a case, Frenkel said, prosecutors must have documents or cooperating witnesses. "In white-collar cases, you are looking for fingerprints," he said.

That won't be easy. Enron used a labyrinth of clever, complex transactions, and tracing them to their source is far more daunting than unraveling the relatively commonplace fraud at such companies as WorldCom and Adelphia.

Further complicating the issue is that in some cases Enron's machinations were legal, even brilliant, but not what lawmakers intended.

For example, a lengthy congressional review of Enron's tax business was laced with vitriol over how the company's tax department was used as a revenue-generating machine. But ultimately the report had to conclude no laws appeared to have been broken.

Hedges said the Justice Department is unlikely to have given up on making a case against Lay and Skilling, but they may have to.

"The last thing on earth that should happen is the task force says they have no case and the DOJ tells them to file anyway," Hedges said. "Then (the top men) would walk and it would be the worst of all worlds."

http://www.chron.com/cs/CDA/ssistory.mp ... ss/1834453

And a Washington Post story:

http://www.washingtonpost.com/wp-dyn/ar ... Jan14.html

Enron Chief Got Early Warning
Staffer's Memo Told Lay In August of 'Scandals'

By David S. Hilzenrath and Peter Behr
Washington Post Staff Writers
Tuesday, January 15, 2002; Page A01

Last August, more than two months before Enron Corp. disclosed it had overstated its profits and understated its debts, an internal whistleblower warned Enron Chairman Kenneth L. Lay that the company might "implode in a wave of accounting scandals," congressional investigators said yesterday.

Enron asked its outside law firm to investigate but instructed it not to make a "detailed analysis" or second-guess the company's outside accountants, House Energy and Commerce Committee leaders said.

In an unsigned letter to Lay in August -- shortly after Enron chief executive Jeffrey Skilling suddenly resigned -- Enron employee Sherron Watkins described "a veil of secrecy" around partnerships involving the energy-trading company's chief financial officer, Andrew Fastow.

Watkins, who was not named by the committee, confirmed her role to The Washington Post yesterday. A vice president for corporate development reporting to Fastow, she later met with Lay to explain her allegations.

Watkins declined to discuss her memo or her meeting with Lay. Her attorney, Philip H. Hilder of Houston, said, "For now we're going to let the memo speak for itself."

Her warning "was right on the money," said Ken Johnson, a spokesman for the House committee.

In the letter, she described the kind of misleading accounting and insider deals that caused Enron to correct more than four years of financial results Nov. 8, fueling a meltdown in its stock price and ultimately leading it to seek bankruptcy protection Dec. 2. Investors who held Enron stock, including many employees, lost billions of dollars when the company imploded.

"Is there a way our accounting guru's [sic] can unwind these deals now?" Watkins asked Lay in her letter. She noted, the lawmakers said, that several senior Enron employees had "consistently and constantly" questioned Enron executives, including Skilling, about the company's accounting methods on one partnership.

Committee investigators found Watkins's seven-page letter Sunday while going through 40 boxes of records turned over by Enron, a spokesman said. Rep. W.J. "Billy" Tauzin (R-La.), the committee chairman, and Rep. James C. Greenwood (R-Pa.), chairman of an investigative subcommittee, didn't release the letter. But they quoted from it yesterday in written demands for more records from three parties: Enron; the law firm Vinson & Elkins, which reviewed the allegations for Enron; and the accounting firm Arthur Andersen, which had put its stamp of approval on Enron's flawed financial statements.

The document "raises troubling questions about the extent to which you [Lay] and other senior officials at Enron and Andersen were aware of the controversial financial transactions and accounting practices that would ultimately contribute significantly to Enron's demise," Tauzin and Greenwood wrote.

Enron attorney Robert Bennett said he was "very disappointed" by the committee's disclosure.

"A committee that professes to be objective is selectively releasing material and putting a spin on it. Why have a hearing?" He said that Lay took the memo seriously and asked Enron's top lawyers "to get to the bottom" of the allegations.

The lawyers' report was dated Oct. 15, the day before Enron made the first of a series of damaging revisions to its financial statements. Bennett said Lay would have done whatever Vinson & Elkins recommended.

In her letter, Watkins recommended that Enron enlist independent legal and accounting firms to investigate key transactions and the way Enron and Andersen handled the accounting, according to the lawmakers. Enron instructed Vinson & Elkins to look into the allegations, but within limits.

Bennett said Enron told the lawyers not to second-guess Andersen's accounting and not to make a detailed analysis of particular transactions because he thought speed was essential and he had no reason to question Andersen's work.

Vinson & Elkins interviewed employees of Enron and Andersen, including David Duncan, the Andersen partner overseeing the firm's work for Enron. That suggests Andersen was alerted to potential trouble involving its audits of Enron during the period when its personnel were destroying thousands of pages of records related to Enron.

Andersen has acknowledged destroying records in September, October and November, according to Johnson, and has not ruled out the possibility that records were destroyed after it received an SEC subpoena in November.

The law firm reported that, "because of bad cosmetics" in some of Enron's dealings, "there is a serious risk of adverse publicity and litigation." But the firm concluded that the tipster's allegations did not warrant a wider investigation by independent lawyers or auditors, Tauzin and Greenwood wrote.

Watkins's allegations involved Enron's dealings with related partnerships that it used to keep debts and losses off its books. Even as she urged Lay to undo the deals, Watkins warned that they would be difficult to reverse. If the company tried to fix the deals last year, it would be "a bit like robbing the bank in one year and trying to pay back 2 years later," she wrote, according to the lawmakers.

In the memo, Watkins mentioned two complex transactions involving Enron's purchases of large blocks of stock in two Internet companies several years ago. At the time, Enron made an agreement with a private partnership it had set up to guard against a drop in the Internet companies' share prices.

The partnership, called Raptor, had to pay Enron if the companies' stock prices fell, which they did. This protected Enron against losses of nearly $1 billion in 2000 and part of 2001.

But as its part of the swap, Enron had promised to make up Raptor's losses with shares of Enron stock, which was not fully disclosed to investors. The sharp decline in Enron's stock price that began last spring meant that the company owed Raptor significantly more shares.

Watkins warned that "once again, Enron will issue stock to offset those losses. . . . It sure looks to the layman on the street that we are hiding losses in a related company and will compensate the company with Enron stock in the future. . . .

"I am incredibly nervous that we will implode in a wave of accounting scandals," she said.

Staff writer Kathleen Day contributed to this report.

© 2002 The Washington Post Company

And a CBS News story:

http://www.cbsnews.com/stories/2002/09/ ... 2332.shtml

September 17, 2002 21:54:44
The Early Show CBS Evening News 48 Hours 60 Minutes 60 Minutes II
California Energy Crisis A Sham
LOS ANGELES, Sept. 17, 2002
(AP)

"This report shows that those excuses are simply untrue. There was enough capacity to avoid almost all of the blackouts."
Gary Cohen,
state investigator

(CBS) State officials say California's energy crisis -- its blackouts and sky-high power prices that cost California billions -- was manufactured by key power companies that hoarded energy supplies to make more money, reports CBS News Correspondent Vince Gonzales.

Overall, the companies kept more than 30 percent to 50 percent of their power off the market. During some of the worst moments of the crisis, they held back even more -- anywhere from 55 to 76 percent of production -- all in an effort, whistleblowers told CBS News more than a year ago, to cut the power supply and drive up prices.

But the companies denied allegations of manipulation.

"It's preposterous. It never happened," said Duke Power Company's Tom Williams in June 2001.

And they're still denying it today.

But CBS News obtained records showing federal regulators have power plant control room audio tapes that prove traders from Williams Energy called plant operators and told them to turn off the juice. The government sealed the tapes in a secret settlement and still refuses to release them.

The new report found Williams held back more energy from California than any other company. It's vindication for state investigators upset that energy companies blame the crisis on everything from the weather to not enough power plants.

"This report shows that those excuses are simply untrue. There was enough capacity to avoid almost all of the blackouts," Gary Cohen, state investigator said.

Meanwhile, in San Francisco, a federal grand jury is now examining the role the power companies and energy traders played in the California market's meltdown and whether any laws were broken.

© MMII, CBS Worldwide Inc. All Rights Reserved.

And an AP report:

http://story.news.yahoo.com/news?tmpl=s ... california

Vigorous Enron Probe
Tue May 7, 4:10 PM ET

By MARK SHERMAN, Associated Press Writer

WASHINGTON (AP) - President Bush expects vigorous pursuit of an investigation that prompted Enron Corp. to acknowledge it drove up electricity prices during California's energy crisis, a White House spokesman said Tuesday.

Bush has faced criticism for his close ties to the collapsed energy giant, which has been the single biggest financial supporter of his political career.

But Tuesday, the administration took credit for a Federal Energy Regulatory Commission inquiry that demanded the company turn over documents revealing its practices during California's crisis.

The documents "were released by FERC, an independent agency of this government ... as part of an ongoing investigation launched by this administration," White House spokesman Ari Fleischer said. FERC opened the inquiry in February.

The revelation is a development "the president has noted, and he expects the investigation will be vigorously pursued wherever it may go," Fleischer said.

He used the disclosures to renew the White House call for tougher penalties for violations of the Federal Power Act.

But Fleischer declined to say whether Bush backs a call from Sen. Dianne Feinstein, D-Calif., that Attorney General John Ashcroft and the Justice Department open a criminal investigation into Enron's possible manipulation of the state's electricity market.

Justice Department spokeswoman Barbara Comstock did not respond directly to Feinstein's request. "The Enron Task Force is continuing to actively investigate a wide variety of matters concerning the conduct of Enron Corp. and individuals and entities associated with it," Comstock said in a statement that noted that Attorney General John Ashcroft has recused himself from the investigation because he received campaign money from the company in his 2000 Senate race.

A memorandum, written by Enron lawyers in December 2000, outlined practices similar to those described by California officials who allege the energy trading company created phantom congestion on electricity transmission lines and engaged in sham sales among its affiliates to increase electricity prices.

Describing one such strategy called "Death Star," the lawyers wrote: "The net effect of these transactions is that Enron gets paid for moving energy to relieve congestion without actually moving any energy or relieving any congestion."

Another practice, called "Ricochet," allowed Enron to send power out of California and then resell it back into the state to avoid price caps that applied to transactions solely within California.

"To us, this is really the smoking-gun memo," said Sean Gallagher, a staff attorney with the California Public Utilities Commission "It's Enron's own attorneys admitting that Enron is manipulating the California market."

Enron turned over the documents to the Federal Energy Regulatory Commission, which made them public Monday.

Steve Maviglio, a spokesman for California Gov. Gray Davis, said the memos are more evidence that federal energy regulators should order power companies to refund billions of dollars in exorbitant electricity sales.

"My suspicions have been high for some time that Enron was fraudulently manipulating the California energy market for its own benefit," Feinstein said in a statement. "I am asking Attorney General John Ashcroft to pursue a criminal investigation to determine whether in fact federal fraud statutes or any other laws were violated by Enron."

Enron provided the memo to the Federal Energy Regulatory Commission along with a later, undated report from other Enron lawyers that took issue with the first memo. FERC posted the memos on its Web site, along with a letter to Enron seeking more information about the company's electricity and natural gas trades in California and other Western states.

Robert Bennett, a Washington attorney representing Enron, said the memos became known 10 days ago and could easily have been kept confidential. The reports were addressed to Richard Sanders, Enron's vice president and assistant general counsel, to prepare for investigations and lawsuits resulting from the California situation.

"Current management decided the responsible thing to do was to release the documents," Bennett said.

___

On the Net:

FERC: http://www.ferc.gov

Enron: http://www.enron.com

------------------------------------------------------------------------
Copyright © 2002 The Associated Press. All rights reserved
Copyright © 2002 Yahoo! Inc. All rights reserved.

Really, it gets to the point where Enron should have been reclassified as a criminal enterprise.

I can type out a screed in a few minutes like that.

I'm sure you can.

Hamel · Post by **Hamel** » 2003-08-17 10:33pm

Coyote wrote:total bullshit snipped

You know, I'm getting tired of you going on this tirade every single fucking time something negative is said of the Bush admin. If all you can do is whine about people not liking Bush then you might as well shut ya face ya babeh.

Stormbringer · Post by **Stormbringer** » 2003-08-17 10:43pm

Hamel wrote:
Coyote wrote:total bullshit snipped
You know, I'm getting tired of you going on this tirade every single fucking time something negative is said of the Bush admin. If all you can do is whine about people not liking Bush then you might as well shut ya face ya babeh.

Except you're ranting about the Bush admininistration for things that aren't even connected to the Bush administration. You blame him for everything and most of the time offer jack shit for proof. It's one thing to critisize Bush, another to blame every misfortune this world suffers on the Bush administration like he's the 21 century equivalent of the town witch. Try at least to makes sense rather than just screaming "It's his fault. It's all Bush. Burn him!"

Stormbringer · Post by **Stormbringer** » 2003-08-17 10:46pm

Oh, and if the news that it started in Ohio this whole mess has nothing to do with Bush and everything to do with the millions of people sucking down electricty for A/C, fans, and the billion other gadgets we can't live with out to the point that the grid simply overloaded and went down.

Post by **Darth Wong** » 2003-08-18 02:31am

Stormbringer wrote:Oh, and if the news that it started in Ohio this whole mess has nothing to do with Bush and everything to do with the millions of people sucking down electricty for A/C, fans, and the billion other gadgets we can't live with out to the point that the grid simply overloaded and went down.

That is the most grotesque oversimplification I've seen in quite a while.

Dahak · Post by **Dahak** » 2003-08-18 03:34am

Darth Wong wrote:
Stormbringer wrote:Oh, and if the news that it started in Ohio this whole mess has nothing to do with Bush and everything to do with the millions of people sucking down electricty for A/C, fans, and the billion other gadgets we can't live with out to the point that the grid simply overloaded and went down.
That is the most grotesque oversimplification I've seen in quite a while.

But the point can't be denied that the average American needs immensly more power than many other countries. IIRC, only Norway uses more...

Stormbringer · Post by **Stormbringer** » 2003-08-18 01:10pm

Darth Wong wrote:
Stormbringer wrote:Oh, and if the news that it started in Ohio this whole mess has nothing to do with Bush and everything to do with the millions of people sucking down electricty for A/C, fans, and the billion other gadgets we can't live with out to the point that the grid simply overloaded and went down.
That is the most grotesque oversimplification I've seen in quite a while.

Simplification yes. But it was happened. In Ohio one line overloaded due to the load on it and as it was shunted to other lines they went down as they were overloaded and in the end it spread as more and more power was being sent through less lines.

Keevan_Colton · Post by **Keevan_Colton** » 2003-08-18 09:35pm

And you dont think it might be pertinent to this that there was not sufficient capacity for the service required?

Stormbringer · Post by **Stormbringer** » 2003-08-18 09:57pm

Keevan_Colton wrote:And you dont think it might be pertinent to this that there was not sufficient capacity for the service required?

I think it's relevant but it's mostly the huge draw required for an especially hot summer. It's happened before in lots of places, it's just this one turned into a huge casade for some reason.

Post by **Coyote** » 2003-08-18 11:33pm

Hamel wrote:
Coyote wrote:total bullshit snipped
You know, I'm getting tired of you going on this tirade every single fucking time something negative is said of the Bush admin. If all you can do is whine about people not liking Bush then you might as well shut ya face ya babeh.

Well, you fucking well dodged my point, but that doesn't make you Jackie Chan. You get back what you shovel out-- a tirade. Every time you smell someone's nasty fart you post another message about how George Bush is the embodiement of all that is evil. You are actually making him sound like some all-powerful demigod that has his hands in everything. He's becoming Agent Smith for you.

Instead of just posting endless tirades about how Bush is Darkness incarnate why not find something of substance to write-- why should I vote for anyone but Bush? I'm not impressed by him, as far as I'm concerned my vote is open to persuasion-- if it is good and meaningful.

Guess what? Oil and energy companies have been bilking and price gouging people long before the George W. Bush was ever around. The great Western States blackout of August 10-11, 1996, happened during Clinton's reign! And oil companies were making money then, too... so maybe it is all Bill, Hillary's, and Al's fault?

Hamel · Post by **Hamel** » 2003-08-19 12:15am

Well, you fucking well dodged my point, but that doesn't make you Jackie Chan. You get back what you shovel out-- a tirade. Every time you smell someone's nasty fart you post another message about how George Bush is the embodiement of all that is evil. You are actually making him sound like some all-powerful demigod that has his hands in everything. He's becoming Agent Smith for you.

Is it your sole purpose in life to construct strawmen for yourself so you can beat on them, therefore giving a boost to your ego?

Instead of just posting endless tirades about how Bush is Darkness incarnate why not find something of substance to write-- why should I vote for anyone but Bush? I'm not impressed by him, as far as I'm concerned my vote is open to persuasion-- if it is good and meaningful.

Iceberg has posted informative stuff on Dean's standpoints. You might find his gun stance to your liking.

Guess what? Oil and energy companies have been bilking and price gouging people long before the George W. Bush was ever around. The great Western States blackout of August 10-11, 1996, happened during Clinton's reign! And oil companies were making money then, too... so maybe it is all Bill, Hillary's, and Al's fault?

Clinton's hands are hardly clean, and as the article pointed out, he didn't handle Enron appropriately (if at all) until Dec 2000. Clinton's lack of support for regulation is yet more evidence that he wasn't a far lefty.

Reagan and every president thereafter shares some of the blame for the deregulatory mess.

Post by **Coyote** » 2003-08-19 12:32am

Then blame deregulation and the complete lack of punishment for corporate criminals. White collar crime gets a wink and a nod while we're supposed to believe that some black guy in a ghetto brownstone smoking some weed is a threat to national security.

You tackle substance and real arguments with vigor that I admire; but not just your tirades but the tirades of others earn impatience. I am not immune, when I was pissed off and posted a ranting diatribe about US and European relations I got smacked down as well, and got a well-deserved rebuke from Edi, whom I respect. But in regards to your rant, it really does sound like Bush is becoming some all-powerful bogeyman, behind every conspiracy or something.

The problems go way beyond the greatest powers or plots of any one man. That's why I say that blaming Bush is as useful as blaming him for the fall of Rome. It is a waste to go after one guy who's obviously not the most dynamic of leaders ever to grace the world's stage.

I am surprised to find myself liking Dean, I have read some of his policies and his gun control stance strikes me as as a breath of fresh air from the Dem party. I still wonder about his 'winnability' althogh I'll vote my conscience when crunch time comes... but I need to learn more. Kerry was the fair-haired boy for awhile but has since been turned to wallpaper...

NapoleonGH · Post by **NapoleonGH** » 2003-08-19 01:13pm

Coyote when george bush is/was in the pockets of the offenders (Aka Enron et al), and constantly shows that he only cares about buisnesses making more profit than actually about the american people you might want to get a clue something is wrong.

Hell my 90 year old great uncle, life long republican, republican mayor of his small upstate NY outside of Syracuse town, never voted for a democrat in his life, declares that someone would have to put a gun to his head to get him to vote for dubya, i think its a pretty fair bet to figure that george bush isnt the best guy on earth.