California's energy fiasco

October 4, 2003:

It's hasta la vista to $9 billion if the Governator is selected It's not what Arnold Schwarzenegger did to the girls a decade back that should raise an eyebrow. According to a series of memoranda our office obtained today, it's his dalliance with the boys in a hotel room just two years ago that's the real scandal. ...Now, thirty-four pages of internal Enron memoranda have just come through this reporter's fax machine 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. It takes real cojones to bring such a suit. Who's the plaintiff taking on the bad guys? Cruz Bustamante, Lieutenant Governor and reluctant leading candidate against Schwarzenegger. Now follow the action. One month after Cruz brings suit, Enron's Lay calls an emergency secret meeting in L.A. of his political buck-buddies, including Arnold. Their plan, to undercut Davis (according to Enron memos) and "solve" the energy crisis -- that is, make the Bustamante legal threat go away. How can that be done? Follow the trail with me. ...Bush's boys on the commission have a problem. The evidence against the electricity barons is rock solid: fraudulent reporting of sales transactions, megawatt "laundering," fake power delivery scheduling and straight out conspiracy (including meetings in hotel rooms). 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 two 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: Re-call the Governor. ...The pay-off? Once Arnold is Governor, he blesses the sweetheart settlements with the power companies. When that happens, Bustamante's court cases are probably lost. There aren't many judges who will let a case go to trial to protect a state if a governor has already allowed the matter to be "settled" by a regulatory agency. You can read all of this Greg Palast article here.

Fast forward - February 26, 2004:

An Oklahoma energy company accused of overcharging California during the power crisis will refund about $140 million to local utilities, the companies reported Wednesday. Williams Cos. has agreed with Pacific Gas and Electric Co. and Southern California Edison to resolve claims that the Tulsa firm manipulated California's energy market during the 2001 crisis, which triggered blackouts and ravaged the state budget. ...The settlement agreement, however, hardly represents a windfall for California utilities. They will still owe Williams for power purchased during the crisis, an amount Williams previously estimated at $230 million. Williams spokesman Brad Church declined to give an updated figure on Wednesday, but said it would be "substantially more than the $140 million you see here." ...The deal underwhelmed energy industry watchdogs. Mindy Spatt, spokeswoman for The Utility Reform Network, said that financial settlements arising from the energy crisis have, so far, been too small. "Certainly, that's been the pattern," Spatt said. "The amounts have been inadequate."

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I wonder why PG&E and SoCal Edison accepted this deal.

And I wonder how Orrin Hatch's suddenly thought of proposal to permit an immigrant who has been a citizen for at least 20 years to run for president is coming along. (Arnold became a citizen in '83 - Hatch proposed the constitutional amendment in late '03.)