Sunday, February 13, 2005

Long-Range Planning 

Aficionados of the heist movie (Asphalt Jungle, Rififi, The Killing, Topkapi, The Italian Job, Big Deal on Madonna Street, etc.) know that there is nothing quite so engrossing as watching a carefully-engineered ripoff come together step by step. With that in mind, won't you return with us now to the thrilling days of the naked Republican power grab known as the California Recall Election? From Jason Leopold, Utne Reader, Aug. 2003:
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 . . . .

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.
Greg Palast, Oct. 5, 2003:
Now, 34 pages of internal Enron memoranda have just come through this reporter's fax machine that tell all about the tryst between Maria's husband and the corporate con men. It turns out that Schwarzenegger knowingly joined the hush-hush encounter as part of a campaign to sabotage a Davis-Bustamante plan to make Enron and other power pirates then ravaging California pay back the $9 billion in illicit profits they carried off . . . .

Here's the story Arnold doesn't want you to hear. The biggest single threat to Ken Lay and the electricity lords is a private lawsuit filed last year under California's unique Civil Code provision 17200, the "Unfair Business Practices Act." This litigation, heading to trial now in Los Angeles, would make the power companies return the $9 billion they filched from California electricity and gas customers . . . .

So the Bush commissioners cook up a terrific scheme: charge the companies with conspiracy but offer them, behind closed doors, deals in which they have to pay only 2 cents on each dollar they filched.

Problem: the slap-on-the-wrist refunds won't sail if the governor of California won't play along. Solution: Recall the Governor.
S.F. Chronicle, Oct. 11, 2003:
Gov.-elect Arnold Schwarzenegger is preparing a push to deregulate the state's electricity markets -- a move embraced by business leaders and some energy analysts but criticized by many Democrats and consumer advocates as a return to the failed policies that sparked California's energy crisis . . . .

Schwarzenegger's energy strategy is being driven by some of the same members of former Gov. Pete Wilson's team who led the push for energy deregulation in the mid-1990s. The governor-elect, for example, picked for his transition team Jessie Knight, a former Wilson appointee to the Public Utilities Commission and a leading proponent of deregulation.

Consumer groups already are warning that the proposals made by Schwarzenegger during the campaign would expose electricity users to greater fluctuations in prices while limiting state oversight of power trading -- a combination that could allow the type of market manipulation that plagued California during the state's energy crisis in 2000-01.
And last but not least, from the S.F. Chronicle, Feb. 12, 2005:
A power-industry veteran whose former firm oversees a subsidiary accused of gouging California during the energy crisis was hired Friday to run the state's electricity grid.

Yakout Mansour will serve as president and chief executive officer of the California Independent System Operator, a nongovernment entity that manages the state's web of long-distance transmission lines. He starts the job in March with a $395,000 salary.

During the electricity crisis of 2000-2001, Mansour was an executive at BC Hydro, a Canadian utility whose trading subsidiary, Powerex, sold electricity to California.

The state has filed two lawsuits against Powerex, accusing the Vancouver firm of manipulating the state's energy markets to reap $850 million in excess profit. The second suit was filed Thursday.

Mansour, however, worked for BC Hydro itself, not Powerex, and served as the parent company's vice president of grid operations and inter-utility affairs. Members of the ISO's governing board said Friday they hired Mansour only after determining that he had nothing to do with Powerex or its sales to California.

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