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The Cheney - Enron links

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    Memo details Cheney--Enron links Company s suggestions resembled elements of the administration s energy policy David Lazarus San Francisco Chronicle Staff
    Message 1 of 1 , Jan 31, 2002
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      Memo details Cheney--Enron links Company's suggestions
      resembled elements of the administration's energy policy
      David Lazarus
      San Francisco Chronicle Staff Writer
      Wednesday, January 30, 2002

      While the White House insists that details of its talks with
      Enron officials remain secret, a memo outlining
      those discussions reveals the extent to which the Houston energy
      giant lobbied to influence government policy.

      The memo, a copy of which was obtained by The Chronicle, was
      handed by former Enron Chairman Ken Lay to
      Vice President Dick Cheney last April when the two met to discuss
      the administration's response to
      California's energy crisis.

      The White House acknowledged last night that aspects of the memo
      resembled elements of Cheney's energy
      plan, but it refused to say whether the document was included in
      notes that Cheney now refuses to divulge to
      congressional investigators.

      The General Accounting Office is threatening to sue the
      administration if it doesn't disclose details of its talks
      with Enron officials.

      The three-page document contains eight points spelling out
      Enron's case for why federal authorities should
      refrain from imposing price caps or other measures sought by
      California officials to stabilize runaway electricity
      prices.

      A number of the positions in the memo subsequently made it into
      Cheney's energy plan or were reflected in
      comments by senior administration officials.

      "Events in California and in other parts of the country
      demonstrated that the benefits of competition have yet to
      be realized and have not yet reached consumers," the memo argues.

      "The following actions need to be taken," it continues, outlining
      positions on a series of matters. Some of the
      topics, such as equal access to transmission grids and
      interconnection of power networks, are largely
      technical in nature.

      ENRON FROWNED ON PRICE CAPS

      The key point as far as California was concerned was whether
      soaring wholesale power prices should be
      limited or whether such prices were merely a reflection of normal
      supply-and-demand dynamics.

      "The administration should reject any attempt to re-regulate
      wholesale power markets by adopting price caps
      or returning to archaic methods of determining the cost-base of
      wholesale power," the memo says.

      It adds that even temporary price restrictions "will be
      detrimental to power markets and will discourage private
      investment."

      The memo blames California officials for having made only
      "limited progress" in tackling the state's power
      woes. It says that if the administration were to follow all of
      Enron's recommendations, the measures "would
      mitigate this crisis."

      An Enron spokesman confirmed that the memo had been given by Lay
      to Cheney during their one-on-one
      talks. Mary Matalin, an adviser to the vice president, said
      Cheney's energy plan included input from many
      sources. "Just because some of the things (in the memo) are
      included in the plan doesn't mean they were from
      the talks" between Cheney and Lay, she said.

      LIMITS CALLED 'A MISTAKE'

      Still, as far as price caps go, the administration was quick to
      fall into lockstep with Enron's opposition to any
      federal regulatory moves. "We think that's a mistake," Cheney
      said just weeks after his meeting with Lay.
      Nevertheless, federal regulators finally imposed price limits in
      June based on the cost of the least-efficient, and
      thus most expensive, generating plant. Democrats in Washington
      had threatened to act on their own if the
      regulators did not come up with a remedy for California's
      troubles.

      Cheney also echoed Enron's position on the culpability of
      California's leaders in exacerbating the state's
      energy problems. "When the problem became obvious last year, over
      a year ago, they didn't respond," he said
      in May.

      Noting that California had experienced rolling blackouts and the
      bankruptcy of its biggest utility, he also said, "I
      don't think that's a sterling record of leadership, I would
      guess, on their part."

      SHARED FAITH IN DEREGULATION

      To be sure, Cheney, Lay and President Bush, as well as other
      industry players, shared a belief in deregulation
      well before the lights went out in California. But the memo
      underscores the broad kinship between Enron and
      the administration in drafting official policy.

      Steve Maviglio, a spokesman for Gov. Gray Davis, said it came as
      no surprise that Enron had substantial clout
      in formation of the Bush administration's stance on California's
      difficulties.

      "What the federal government did during the energy crisis was
      pretend that the problem didn't exist and say
      that the markets can solve everything, and that's the same thing
      Ken Lay told the governor," Maviglio said. He
      added that "the administration was espousing what Enron was
      espousing -- that the markets should fix
      themselves."

      Whatever else, it's extraordinary for a private company,
      particularly one accused by California officials of having
      gouged the state with wildly inflated energy prices, to have
      played such a prominent role in the White House's
      response to the crisis.

      'CONSUMERS SHOULD BE OUTRAGED'

      "If the administration was allowing Enron to guide its policy
      during the California energy crisis, consumers
      should be outraged," said Janee Briesemeister, senior policy
      analyst at Consumers Union in Austin, Texas.
      "It's not unusual for a company to hand policymakers their ideas
      for what should be done," she added. "Things
      break down when policymakers refuse to admit that they used what
      was brought to them by industry."
      Cheney's argument, as he told an interviewer Sunday, is that
      revealing details of his talks with Enron would
      undermine "the ability of the president and the vice president to
      solicit advice from anybody they want in
      confidence."

      Bush echoed this sentiment a day later, saying that confidential
      talks are necessary to "get good, sound
      opinions." He reiterated that stance yesterday in a meeting with
      congressional leaders.

      Craig McDonald, director of Texans for Public Justice, a watchdog
      group, called it laughable for the
      administration to cast its secrecy as a defense of high-minded
      principle. "All they're fighting for is to keep the
      wraps on how much clout Enron had over Dick Cheney's energy
      plan," he said.

      (In accordance with Title 17 U.S.C. Section 107, this material is
      distributed without profit to those who have
      expressed a prior interest in receiving the included information
      for research and educational purposes.)


      � : t r u t h o u t 2001



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