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FW: shedding some light (FW: Update & Commentary from ZNet )

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  • Rebecca Cramer
    ... From: Stuart Shafer Sent: Friday, August 15, 2003 6:33 AM To: James Divney; Rebecca Cramer; Bob Perry; Betty Bullock; Vincent Clark; Roberta Eveslage; Pete
    Message 1 of 1 , Aug 15, 2003
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      -----Original Message-----
      From: Stuart Shafer
      Sent: Friday, August 15, 2003 6:33 AM
      To: James Divney; Rebecca Cramer; Bob Perry; Betty Bullock; Vincent
      Clark; Roberta Eveslage; Pete Peterson
      Subject: shedding some light (FW: Update & Commentary from ZNet )

      FYI. I get these commentaries from ZNET. Here's one from Greg Palast on the
      blackout I thought you all would enjoy.

      ****forwarded commentary******

      Here is Palast on yesterday's events, and their context and meaning.




      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 creator of 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
      markets" 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 legislators 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 San Diegans in the
      first California city to go "lawless" looked at their bills, the 20%
      savings became a 300% jump in surcharges.

      Enron circled California and licked its lips. As the number one
      life-time contributor to the George W. Bush campaign, 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 directed power
      movements, 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

      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

      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 cowboys of Niagara Mohawk raised prices, slashed
      staff, cut maintenance and CLICK! -- New York joins Brazil in the Dark

      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.


      Palast is the author of the New York Times bestseller, "The Best
      Democracy Money Can Buy" (Penguin USA 2003) and the worstseller,
      "Democracy and Regulation," a guide to electricity deregulation
      published by the United Nations (2003, written with T. MacGregor and J.
      Oppenheim). See Greg Palast's award-winning reports for BBC Television
      and the Guardian papers of Britain at www.GregPalast.com. Contact Palast
      at his New York office: media@....

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