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CounterPunch
November
21, 2002
Secrets and
Lies:
Bush, Cheney and the Great Rip-Off of California Ratepayers
by JASON LEOPOLD
The front pages of California's major daily newspapers
were buzzing last week with fresh reports of one energy company
ripping off the state in the spring of 2000 by deliberately
keeping a power plant from generating electricity so the company
could take advantage of sky-high wholesale electricity prices
the state was forced to pay to keep the lights on.
The evidence, a transcript of a tape-recorded
telephone conversation between an employee at Williams Companies,
the Tulsa, Okla. based energy company, and an employee at a
Southern California power plant operated by Williams, shows
how the two conspired to jack up power prices and create an
artificial electricity shortage by keeping the power plant
out of service for two weeks. The scheme worked. Williams earned
$10 million from California consumers through its manipulative
tactics. In March 2001, in a settlement reached with FERC, Williams
agreed to refund California $8 million it obtained through the
scam without admitting any guilt.
But here's the real tragedy. The evidence
has been under seal and in the possession of President Bush's
Federal Energy Regulatory Commission; the governing body that
is supposed to make sure power prices is just and reasonable,
for more than a year. FERC released the transcripts after the
Wall Street Journal sued the commission to obtain the full copy
of its report. However, it was New York Times op-ed columnist
Paul Krugman who first wrote about the existence of the Williams
tapes in a Sept. 27 column. The Journal sued FERC after Krugman's
column ran and reported the findings of the FERC investigation
last week.
How could FERC keep this smoking gun
concealed for a year? It's no secret that California politicians
and consumer groups have blamed energy companies like Williams
and Enron for the state's energy crisis and even alleged that
energy companies created the illusion of an electricity shortage
by shutting down power plants in the state. Had this evidence
been released 18 months ago, pre-Enron, it would have driven
that point home. But it wouldn't have jibed with Bush's energy
policy, which was made public instead in May 2001. Around the
same time, President Bush was in California and met with Gov.
Gray Davis about the state's energy crisis. Bush told Davis
the state implemented a flawed energy plan and that and that
alone was the reason for electricity price spikes. Meanwhile,
FERC is sitting on a pot of gold and no one in California even
knows it.
A few weeks before the meeting between
Bush and Davis, Vice President Dick Cheney, who chairs Bush's
energy task force, was interviewed by PBS' Frontline for a special
series on California's energy crisis. During the interview,
Cheney flat-out denied that energy companies ripped off California.
"The problem you had in California
was caused by a combination of things--an unwise regulatory
scheme, because they didn't really deregulate," Cheney
said in the May 17 Frontline interview. "Now theey're trapped
from unwise regulatory schemes, plus not having addressed the
supply side of the issue. They've obviously created major problems
for themselves and bankrupted PG&E in the process."
It's true that California created a horribly
flawed deregulation plan. But as state Sen. Joseph Dunn, a Democrat
leading the investigation into California's energy crisis,
told me: "we may have left the car running but the energy
companies stole the car."
When asked whether it was possible whether
energy companies were behaving like a "cartel" and
if some of the high power prices in California could be the
result of manipulation, Cheney responded with a resounding "no."
It's highly unlikely that Bush, Cheney
and members of the energy task force were kept in the dark about
the Williams scam, especially since the findings of the investigation
by FERC took place around the same time the policy was being
drafted.
According to evidence obtained by Congressman
Henry Waxman, D-California, earlier this year, the energy task
force "considered and abandoned plans to address California's
energy problems in its report." Despite my best efforts
to get an answer from the White House about whether the energy
task force knew about the Williams scam while it was drafting
its policy my call was never returned. Additional evidence has
been released this year by federal and state investigators that
show a pattern of deceit by energy companies and give credence
to the claims that California's energy crisis was manufactured.
To think that some of these companies influenced President Bush's
energy policy is like asking a convicted murderer to decide
his own fate.
Unfortunately, with a change in leadership
in the Senate and the House it doesn't appear that new information
about the energy task force will be released anytime soon, according
to John Hess, an aide to Senator Barbara Boxer, D-California.
"According to our energy person,
the Commerce Committee has no plans at this time to hold a hearing
on Cheney and his Task Force. With the change in the majority,
I'm not surprised that the Republicans who now control the Committee
agenda prefer not airing this issue further."
But this latest saga is just an example
of why it's crucial that Cheney release the names of the people
in the energy sector he met with while preparing the President's
energy policy. Cheney's stonewalling tactics have bought the
administration some time. But the heat is on.
Jason Leopold
can be reached at: jasonleopold@hotmail.com
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