WASHINGTON – The Bush administration and the rightwing GOP leadership on Capitol Hill have quietly shelved any tough legislation to curb Enron-style corporate abuses, yet new disclosures keep popping up. The latest was a 44-page document, a step-by-step guide to “gaming” the California electricity market, prepared by Perot Systems, a software firm owned by Dallas millionaire Ross Perot. The document was found in a box of materials turned over to a California Senate Committee by Reliant Energy.
Perot Systems, Inc., was in a unique position to instruct energy traders on how to swindle California ratepayers because it designed the computer software for the California Independent Systems Operator as well as the now defunct Power Exchange, both of which controlled the flow of electricity through California’s enormous power grid. Perot Systems had an intimate knowledge of the flaws in California’s deregulated electricity market and could instruct Reliant, Enron, Dynegy, Duke Power and other energy traders on how to create “phantom” shortages that would drive up electricity prices, how to divert electricity across state borders and then reimport it at prices four or five times higher than California’s capped prices.
California State Sen. Joseph Dunn (D-Garden Grove) has asked Perot to testify before the committee investigating price manipulation of the wholesale energy market, which Dunn chairs, on Perot System’s role in an energy crisis that will ultimately cost as much as $30 billion in electricity overcharges unless ratepayers succeed in cancelling long-term contracts based on ruinous rates. As electricity prices skyrocketed last summer, George W. Bush and Richard Cheney flatly rebuffed requests by Gov. Gray Davis and other California officials that they intervene and place caps on the electricity rates. Bush and Cheney waited until rates had soared 400 percent or more before the Federal Energy Regulatory Commission locked in the rates at skyhigh levels.
“We intend to do some pretty broad-based examinations into Perot’s relationship with the state’s energy crisis,” Dunn said. He pointed out that some of the strategies described in the Perot Systems guidebook are identical to the gameplan outlined in Enron memos with names like “Death Star” “Get Shorty” and “Fat Boy.”
More than 75 Housemembers wrote an open letter to House Speaker Dennis Hastert (R-Ill.) and Rep. Billy Tauzin (R-La.), chair of the House Energy and Commerce Committee, protesting the refusal of the House GOP leadership to investigate the role of Enron and other energy traders in the California crisis. “Many members have been asking for such an inquiry for more than three months and we’ve never received a reply to our requests,” the letter charged.
The lawmakers pointed out that the House probed Enron’s deceptive accounting methods. “Enron, however, is an energy marketer not an accounting firm,” the June 6 letter said. “Despite a conclusive record that Enron engaged in deceptive business practices to turn debt into profits in its annual report, there seems to be disbelief that Enron gouged consumers. Indeed, the House ignored reports that Enron and other energy companies ‘gamed’ the energy market, charging astronomical prices in violation of the ‘just and reasonable’ standard of the Federal Power Act.”
With the House and Senate poised to open a conference to resolve differences between their versions of a comprehensive energy bill, “we need to learn about the flaws in our energy market,” the letter continued. “The House of Representatives cannot be silent. California and the Pacific Northwest were brought to their economic knees by the schemes … The American people deserve the full truth … of this shameful debacle.”
It was government deregulation that opened the door to the swindle and the door will be opened wider if the the oil-gas lobby has its way in the House-Senate conference on the energy bill. According to the Sierra Club, the Senate energy bill “eliminates safeguards that protect consumers from Enron-like manipulations.” It gives energy corporations $20 billion in tax breaks, including continued subsidies for marketing gas-guzzling, smog-belching SUVs.
Even the victory in the Senate vote to block oil drilling in the Arctic National Wildlife Preserve could be reversed in the House-Senate Conference, since the House voted to approve the drilling. The Environmental Protection Administration, meanwhile, weakened rules on enforcement of the Clean Air Act.
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