Sen. Boxer: Lay memo is smoking gun

WASHINGTON – Sen. Barbara Boxer (D-Calif.) assailed former Enron CEO Ken Lay Feb. 4 for pulling out of a Senate Commerce Committee hearing. She said that once again Lay is keeping the people of California “in the dark.”

The next day Boxer and her colleagues on the committee voted unanimously to subpoena Lay.

Writing in the San Francisco Chronicle, Boxer said she had planned to question Lay about a three-page memo he gave Vice President Dick Cheney last April with proposals for Cheney’s Energy Policy Task Force.

Among the points enthusiastically endorsed by the Bush administration was Enron’s demand that they “reject any attempt to re-regulate wholesale power markets by adopting price caps” on electric utility rates in California, then in the midst of a full-blown energy crisis with rolling brownouts and skyrocketing electricity bills.

Boxer called the Lay memo a “smoking gun” adding, “As we connect the dots, it is becoming increasingly clear that California’s sky-high electricity prices were brought about by Enron’s methodical plan to free itself from all government oversight to hike energy prices in secret.”

Boxer pointed out that under the administration of George Bush senior, Enron was exempted from regulation by both the Commodity Futures Trading Commission and the Securities and Exchange Commission under the 1935 Public Utility Holding Company Act.

In December 2000, a hidden provision was written into a spending bill, exempting Enron from the regulated marketplace. The only obstacle left was the Federal Energy Regulatory Commission (FERC).

When Bush and Cheney were placed in office they bowed quickly to Lay’s demand that they oust FERC chairman Chris Hebert and replace him with Enron’s choice, Pat Wood of Texas. After his meeting with Lay, Cheney “came out in opposition to price caps, thereby forcing California to keep Enron alive,” Boxer said.

Finally in July, FERC did yield to angry demands and impose limited price caps. “But by then, ratepayers had suffered to the tune of $8.9 billion in overcharges,” she said. “This was a secret market … Enron’s friends in high places let the games continue.”

Bush, Cheney and the GOP planned to shift blame for the crisis from themselves to the Democrats, setting the stage for a GOP victory in 2002. It would be revenge for the crushing defeat California voters inflicted on Bush and the GOP in the 2000 election.

But the AFL-CIO, senior citizens, consumer and environmental groups and the African-American and Latino communities mobilized “rolling” protests against the brownouts.

“The people put the blame on those who deserved it,” said Bob Martin, secretary treasurer of the California Forum of Retired Union Members, who helped mobilize the street protests.

“They are right to subpoena Lay and force him to testify on his connections with Bush and Cheney,” Martin said. “They should not be allowed to walk away with the money bags under their arms. The government must take that money and use it to compensate the workers and the public who have lost billions to Enron.”

Martin decried the orchestrated cover-up and stonewalling with the Justice Department waiting weeks before ordering a halt to shredding of documents by Enron and the Arthur Andersen accounting firm. “The administration wants to have all these wars with other countries, proclaiming their supremacy and hope that it diverts the people’s attention from their crimes,” he said. “The people have a right to know how deep this went in the Bush administration.”

During the mass protests, he said, “people responded to the idea that public utilities should be publicly owned, water, oil, gas, electricity.”

That view was echoed by Mindy Spatt, media coordinator of Utility Reform Network in San Francisco. “Enron basically took us to the cleaners and then didn’t even share the profits with their shareholders,” she said. “Cheney himself came from oil and gas interests and he has been shaping policy to benefit those corporations.”

“The issue here isn’t just Enron and Ken Lay. It’s about deregulation as a policy that favors corporations over consumers,” Spatt said. “We shouldn’t place essential commodities like oil and gas in the hands of greedy corporations. Hopefully this crisis will help reverse that trend. We are still facing hugely inflated electricity rates because of deregulation. We think there should be public control.”

Carl Wood, a former leader of the Utility Workers, now a California State Public Utilities commissioner, said he attended a national conference last November, sponsored by Enron to promote energy deregulation. “At that time, I was the only public utility commissioner in the country who opposed deregulation,” Wood told the World in a phone interview from his office. “Ken Lay used me as a foil to ridicule me, telling everyone, ‘Commissioner Wood favors regulation.’ Since the Enron collapse, everyone is coming out of the woodwork in favor of regulation.”

The combination of the California energy crisis and now the collapse of Enron, he said, “stopped energy deregulation in its tracks. A whole number of states have backed away from deregulation or repealed it and others have put it on hold.”

State Rep. John Burton of San Francisco told the World he pushed through legislation to establish a state financial authority to buy and operate electric generating plants. “The state has the authority to take over and operate them to meet public need,” he said. “It’s no surprise that the Bush administration is joined at the hip with Enron. Ken Lay gave Bush bundles of money to run for Texas governor and bundles more in his run for President. If he had appeared in the Senate hearing, Lay probably would have ended up taking the Fifth.”