
California Scammed, East Coast Blacked Out:
Electrical Rape Continues
By Karen Nakamura
Say "rolling blackouts" to any Californian and they'll shutter. Rolling blackouts were the method Texas oil companies used to fleece them in a shady, quasi-legal, price manipulation scam.
As in the recent East Coast blackout, most Californians originally thought their rolling black-outs were just the typical screw-up; over-use, weak transit cables, etc. Committees met to solve the problem, just as they are now gathering across the East Coast, Midwest and Canada. A few talking heads, such as Arizona's Bill Richardson and California's Gray Advise, who's a lot less culpable than Ken Lay, pressed investigation into the transportation logjam built into the system.
However, if the potential scam is swept under the rug, America may become another Argentina. The country was forced to privatize utilities by the World Bank. Enron and gang then bought these dirt-cheap. Prices skyrocket as blackouts ensued until the nation was plunged into bankruptcy.
One of the few legislators to tell it like it is was Marin County's very own Barbara Boxer, two weeks before the blackout. During the Senate's floor debate on the 2003 Energy Act on August 1, Senator Boxer gave an excellent and concise explanation of the complex manipulation of California energy prices by Enron, El Paso and a number of other Texas oil companies during the 2000-01 California black-outs.
Most Californians understand price manipulation was the culprit. But Barbara wasn't speaking to Californians, she was speaking for Californians and warning other states of the fate that could befall them if they went down the rose-covered path towards deregulation. It wasn't that Boxer said anything new, rather she brought all the elements together into an easily understandable whole.
In the simplest of terms, she showed how gas prices reached particularly high spikes in the three fiscal quarters that comprised the energy crisis in California. Her graphs, for example, distinctly showed that despite the energy companies' assertion that their prices shot up astronomically because of peak usage and resulting shortages, data shows usage was down, way down.
For Californians, this makes perfect sense. During the crisis, conservation became de rigueur. Auto dealers reduced the number of lights blazing at night. Office buildings reduced their usage and residents shut off extra appliances while Pacific Gas and Electricity put out public service announcements advocating conservation.
No, after months of investigation it was confirmed that a scam had been run on the people and the state of California, a scam that reduced the state to near bankruptcy and made billionaires out of Enron's Ken Lay and his cohorts.
The trick was generator owners traded California's supposedly excess electricity to other states then traded it back at a higher price from companies they also owned. Running electricity through a bottleneck of ineffective transportation lines added to the increased profits. These manipulations were what caused rolling black outs and higher prices. Then there was the little matter of creating the shortage in the first place. This was done, and was an element in the East Coast blackout, by taking too many plants off line during times when peak usage is typical.
In a statement made the day of the bill's passage, Boxer stated: "The bill does not do enough to protect consumers from another electricity crisis. In 2002, the Senate failed to pass a measure I wrote that would have guarded against future market manipulation by companies like Enron by increasing oversight of the electricity market."
She also opposed the use of ethanol, advocated in the bill, because it "will raise gas prices. Ethanol has also been given a liability waiver and if there are adverse consequences from its use, local communities will have to pay for contamination clean-up costs."
These liability waivers seem to be a mainstay of the Bush Administration and its cohorts. Over and over again in a dozen different settings, the World Court, the fighting in Iraq, the energy companies among others, liability waivers have been raised. The 2003 energy bill also uses the liability card by capping liability of nuclear operators in an accident and, like ethanol, makes taxpayers responsible.
Lisa Gue of Public Citizen, (citizen.org) founded by Ralph Nader, went further into the bill, complaining that "it includes a provision that repeals a vital electricity consumer protection law, the Public Utility Holding Company Act (PUHCA)." This action will advance the destructive path of deregulation and "encourage the same type of behavior that gave us Enron and California's energy crisis." She went on to say that while deregulation is just one ingredient of the Republican led energy plan, it's central to their ideology of promoting corporate profit over consumer protection.
Wenonah Hauter, of the same organization, had this to say about the East Coast blackout, "By all expert accounts, plenty of power was available but something or someone overloaded the wires to move it to market. Electrical deregulation provides incentives for just such overloads since generators must sell as much as possible to boost profits [while furthering] disincentives to make necessary repairs to transmission systems because these essential measures diminish profits."
The BBC's Greg Palace told Aaron Brown of CNN that First Energy of Ohio, which owns the power plants that appear to be one source of the breakdown, has a long history of neglect at its plants. Not only has it been cited numerous times in the past ten years and caught padding the bill, it recently laid off 800 workers.
Two weeks after the passage of the energy bill Senator Boxer warned us about, there was a devastating black-out across the East Coast and the Midwest. Write Barbara and encourage her to explore this avenue further.
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