Saturday :: Aug 30, 2003

Federal Energy Regulatory Commission Protects Bush on California Energy Fiasco


by Steve

Those of us out in California who are convinced that Bush-connected energy companies were substantially responsible for the destruction of California budget surpluses by their manipulation of a flawed state deregulatory system should be watching the actions of the Federal Energy Regulatory Commission closely right now. It seems apparent to even energy-issue novices like me that many of these companies, such as Enron, Duke, Reliant, Williams, et. al were engaged in practices that ended up systematically draining billions from the state’s coffers while Gray Davis initially slept and the FERC totally ignored the matter.

I blame Davis for failing to act quickly on the matter in the 2000-2001 period because he failed to heed warnings from P.G. & E. and Edison that energy traders were about to do these things in the absence of state regulations that allowed stable, long-term contracts. But I assign a lot of the blame for what happened here to FERC and Bush because despite unsuccessful state pleas to FERC to get involved early, Ken Lay was talking to Dick Cheney and Arnold Schwarzenegger during this time about how to maximize company profits while making the situation worse, all under the guise of “greater efficiencies.”

For those of us who wonder how Bush has escaped, and will continue to escape involvement in this, we need look no further than the actions of FERC during the last half-year.

Davis and state Attorney General Bill Lockyer have pursued refunds from the companies through FERC, and Lockyer earlier threatened state investigations, under the premise that these outside energy suppliers withheld supplies to drive up prices. Outside litigation from affected consumers against the energy companies was filed and consolidated into class action suits in federal courts. But it is now becoming evident that Bush will escape this bomb. How? Because FERC’s ongoing investigation of the matter has found far more limited manipulation than the state believes occurred, and FERC is now settling cases against these same manipulators for pennies on the dollar of what the State feels they were gouged. And federal judges are shutting down the litigation against these same companies, asserting the FERC, and only FERC, has the authority to investigate and penalize such behavior. So if you control the regulatory, investigative, and penalty aspects of the game, you can escape blame as well.

Want proof?

FERC, after demanding in June that energy suppliers provide it proof that they didn’t engage in manipulation, now is settling out complaints against those same companies for pennies on the dollar, and agreeing to language in the settlements that state FERC’s earlier conclusions were baseless and unfounded. In fact, it now appears that FERC is moving fast to get this issue wrapped up in advance of next year’s election, even though California and other affected states have submitted thousands of pages of evidence that has yet to be fully evaluated by FERC. Just yesterday, in the Friday afternoon news dump, it was revealed that Reliant was let off the hook for a pittance, as was Aquila Inc. , Mirant, and American Electric Power, among others.

And just yesterday, a federal court judge in California dismissed seven class-action lawsuits against the energy traders, saying that only FERC has exclusive authority over the matters in the suit.

Judge Robert Whaley ruled that the Federal Energy Regulatory Commission has exclusive authority over the issues raised in the lawsuit and that federal law bars any challenges to utility rates that a federal agency has reviewed and approved.

Yet this same judge two years ago said these suits could be filed in state court. However, this isn’t another case of a Bush-appointed judge paying back the Administration and its friends, like in the GAO’s lawsuit against Dick Cheney: Whaley was appointed by Bill Clinton. So what is it? Sole FERC authority or can plaintiffs see redress in state courts?

Nevertheless, the GAO, just this week, found that the FERC has done little to oversee and manage the problems caused by deregulation of the electricity markets that plagued California since last year, when the GAO tagged FERC for the same thing. FERC of course has no interest in doing this, and seems to have every interest in closing off problems for Bush in this area through settlements under its sole authority. And while FERC has done little to better manage and oversee manipulative behavior in the last year, it is quite willing to grab more power for itself to extend this management failure and cover-up ability to other problems like the electric grid crisis, even while the National Commission on Energy Policy points out that electricity deregulation has failed consumers to date.

Unfortunately, while the NCEP calls for even more power for FERC, it fails to address the apparent inaction by FERC on market manipulation and the political reasons for such inaction, namely the fact that it is in FERC’s and the Bush Administration’s best interests to do little in this area, given their financial beholdeness to the industry that got them into the White House. Nor does NCEP address FERC’s behavior in handling the California manipulation scandal.

What you can do:

First, you can fax or email Henry Waxman, Joe Lieberman, or Dianne Feinstein to ask them to demand a congressional investigation of FERC’s behavior in overseeing and settling cases on the California market manipulation. These requests quite frankly will go not very far, since the GOP will never let the GAO get very far in investigating this, nor will industry superwhore GOP representative Billy Tauzin, chair of the House Energy Committee ever investigate it either. But by raising the issue now, it establishes it as a campaign issue for next year that can be used against Bush and the GOP next year to rebut their energy, deregulation, and consumer claims.

Secondly, you can send a fax to the NCEP to ask why they advocate for more power by the FERC when the GAO reports they have done little to manage what they have now, and may have politically bungled the California manipulation mess.

Lastly, you can bring this sordid matter to the attention of your favorite presidential candidate for them to exploit as well.

Steve :: 1:48 PM :: Comments (4) :: Spotlight :: Digg It!