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Old Oct 4th, 2003, 02:59 PM        Arnold and Kenny Boy sittin' in a tree....?
http://www.gregpalast.com/printerfriendly.cfm?artid=283

Arnold Unplugged - It's hasta la vista to $9 billion if the Governator is selected

Friday, October 3, 2003

It's not what Arnold Schwarzenegger did to the girls a decade back that should raise an eyebrow. According to a series of memoranda our office obtained today, it's his dalliance with the boys in a hotel room just two years ago that's the real scandal.



The wannabe governor has yet to deny that on May 17, 2001, at the Peninsula Hotel in Los Angeles, he had consensual political intercourse with Enron chieftain Kenneth Lay. Also frolicking with Arnold and Ken was convicted stock swindler Mike Milken.



Now, thirty-four pages of internal Enron memoranda have just come through this reporter's fax machine tell all about the tryst between Maria's husband and the corporate con men. It turns out that Schwarzenegger knowingly joined the hush-hush encounter as part of a campaign to sabotage a Davis-Bustamante plan to make Enron and other power pirates then ravaging California pay back the $9 billion in illicit profits they carried off.



Here's the story Arnold doesn't want you to hear. The biggest single threat to Ken Lay and the electricity lords is a private lawsuit filed last year under California's unique Civil Code provision 17200, the "Unfair Business Practices Act." This litigation, heading to trial now in Los Angeles, would make the power companies return the $9 billion they filched from California electricity and gas customers.



It takes real cojones to bring such a suit. Who's the plaintiff taking on the bad guys? Cruz Bustamante, Lieutenant Governor and reluctant leading candidate against Schwarzenegger.



Now follow the action. One month after Cruz brings suit, Enron's Lay calls an emergency secret meeting in L.A. of his political buck-buddies, including Arnold. Their plan, to undercut Davis (according to Enron memos) and "solve" the energy crisis -- that is, make the Bustamante legal threat go away.



How can that be done? Follow the trail with me.



While Bustamante's kicking Enron butt in court, the Davis Administration is simultaneously demanding that George Bush's energy regulators order the $9 billion refund. Don't hold your breath: Bush's Federal Energy Regulatory Commission is headed by a guy proposed by … Ken Lay.



But Bush's boys on the commission have a problem. The evidence against the electricity barons is rock solid: fraudulent reporting of sales transactions, megawatt "laundering," fake power delivery scheduling and straight out conspiracy (including meetings in hotel rooms).



So the Bush commissioners cook up a terrific scheme: charge the companies with conspiracy but offer them, behind closed doors, deals in which they have to pay only two cents on each dollar they filched.



Problem: the slap-on-the-wrist refunds won't sail if the Governor of California won't play along. Solution: Re-call the Governor.



New Problem: the guy most likely to replace Davis is not Mr. Musclehead, but Cruz Bustamante, even a bigger threat to the power companies than Davis. Solution: smear Cruz because -- heaven forbid! -- he took donations from Injuns (instead of Ken Lay).



The pay-off? Once Arnold is Governor, he blesses the sweetheart settlements with the power companies. When that happens, Bustamante's court cases are probably lost. There aren't many judges who will let a case go to trial to protect a state if that a governor has already allowed the matter to be "settled" by a regulatory agency.



So think about this. The state of California is in the hole by $8 billion for the coming year. That's chump change next to the $8 TRILLION in deficits and surplus losses planned and incurred by George Bush. Nevertheless, the $8 billion deficit is the hanging rope California's right wing is using to lynch Governor Davis.



Yet only Davis and Bustamante are taking direct against to get back the $9 billion that was vacuumed out of the state by Enron, Reliant, Dynegy, Williams Company and the other Texas bandits who squeezed the state by the bulbs.



But if Arnold is selected, it's 'hasta la vista' to the $9 billion. When the electricity emperors whistle, Arnold comes -- to the Peninsula Hotel or the Governor's mansion. The he-man turns pussycat and curls up in their lap.



I asked Mr. Muscle's PR people to comment on the new Enron memos -- and his strange silence on Bustamante's suit or Davis' petition. But Arnold was too busy shaving off his Hitlerian mustache to respond.


The Enron memos were discovered by the Foundation for Taxpayer and Consumer Rights, Los Angeles,
www.ConsumerWatchdog.org.

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Old Oct 4th, 2003, 03:12 PM       
Did you know that Al Gore stole money from Buddhists?

Just thought you should.

Anyway, exactly how did Enron papers get to this man so long after Enron collapsed? Where were these found?

I need a bit more than this to go on. It's so far from solid that it's barely worth reading.
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Old Oct 4th, 2003, 03:41 PM       
But he's the TERMINATOR. GAWD.
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Old Oct 4th, 2003, 04:07 PM       
Someone sure likes Bustamante.
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Old Oct 4th, 2003, 05:15 PM       
I was so disappointed by this article after the first paragraph.
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Old Oct 4th, 2003, 05:58 PM       
Pervert.
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Old Oct 4th, 2003, 05:59 PM       
Quote:
Originally Posted by Abcdxxxx
Someone sure likes Bustamante.
Someone sure is ignorant of Greg Palast's political leanings.


Quote:
Originally Posted by OAO
I need a bit more than this to go on. It's so far from solid that it's barely worth reading.
http://releases.usnewswire.com/GetRe...d=144-10032003

http://www.nydailynews.com/news/goss...2p-98761c.html

From Daily News, 8/16/03: "I'm not responding to any of those things because I would be crazy if I would," Schwarzenegger said. "I don't remember the meeting."

CBS Market Watch also published something on this, but I didn't feel like going through all their crap to sign up for archives access. I just wanted to convey the point that this isn't entirely "new" news, others have reported this.

I do find it interesting that Arnold can't say, unequivocally, "NO, I did NOT meet with Ken Lay," he simply "can't remember." Funny, you'd think someone would remember whether or not they met with the most scandalous CEO in America at the time, eh?

I'm not saying this is solid, but to quote Max Burbank, I am saying "WATCH THIS STORY."
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Old Oct 4th, 2003, 07:26 PM       
What I want to know is where did the FTCR find this information?
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Old Oct 4th, 2003, 07:33 PM       
Same way people like Matt Drudge do...leakage.
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Old Oct 5th, 2003, 03:45 AM       
No, I don't know who Greg Palast is... but the article reads like it's about equal parts Bustamante puff piece as it does dirty Arnold expose.


I can tell you that this isn't making much of a ripple in California as of the Sunday prior to the election.
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Old Oct 5th, 2003, 01:34 PM       
Quote:
Originally Posted by Abcdxxxx
I can tell you that this isn't making much of a ripple in California as of the Sunday prior to the election
Is this something you should be bragging about? Arnold's sexual history and Hitler comment seem to be making more waves than this too, does that make it right??

Oh, and btw, Greg Palast is the guy who exposed the fucked up voter exemption lists in Florida, post-2000. That didn't make too many "ripples" either, but maybe it should've.

So what is Arnold hiding here???

http://www.bayarea.com/mld/mercurynews/6931667.htm

Actor rejects need to identify all donors now

By Barry Witt and Mary Anne Ostrom
Mercury News

Republican Arnold Schwarzenegger said Friday it shouldn't matter to voters if they know who all his campaign donors are before the Oct. 7 recall election.

``You know something, when the voters vote for me they're voting for me because they trust me. Always when you vote for somebody you have to have trust,'' Schwarzenegger said in an interview. He was responding to criticism earlier this week that he had exploited a campaign-finance loophole by loaning $4.5 million to his campaigns with the expectation that donors would repay him later.

``I will always let anyone know whatever checks come in,'' said Schwarzenegger, who has made political reform a major theme of his campaign. ``They can see it. What does it matter if they read it now? . . . If it is before or after the election, the rules will stay the same. I will not take money from the special interests, from any of the unions, or Indian gaming.''

Proposition 34, the voter-approved campaign-finance measure, prohibited candidates from making loans of more than $100,000 to their campaigns. The purpose was to ensure that candidates would have to make public the names of people funding their campaigns before the election. But the state Fair Political Practices Commission decided last year that the limit did not apply if a candidate obtained a personal loan from a bank and flipped it to his campaign.

``Personal loans are troublesome because, unlike direct contributions by the candidate to his own campaign, they raise the prospect that a winning candidate will raise contributions after the election to pay himself back from groups that have interests in front of him as a newly elected official,'' Jim Knox, executive director of California Common Cause, wrote in e-mail Friday to reporters.

``This prevents the public from knowing the identity of a candidate's financial backers until after the election, and also creates the impression that those contributions will be more influential,'' Knox wrote.
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Old Oct 6th, 2003, 03:16 PM       
I'd deffinitely want to read more on this and see what coroboration there is;

BUT:

This deffinitely qualifies as a WATCH THIS STORY,
The fact that it's not making waves in California right now is far more a comment on Caliufornians (though voters in general are more moved by a simple Hitler story than tey are by a complicated energy scandal any day of the week.)
And the lack of denial is absolutely key. Arnold knows if he met with Kenneth Lay. If he didn't he would have unequivically denied it, I have no question on that at all. His saying "Why do you need to know now, I can tell you after the lection" about loaning his own campaign money is VERY sleazy, and if unsavory facts do durface that he didn't reveal and he's elected, I think you can be pretty sure there will be another recall. I mean, now that we know it works.
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Old Oct 14th, 2003, 12:24 AM       
http://story.news.yahoo.com/news?tmp...laweekly/47725

Pluggging the Latest Conspiracy Theory - Internet buzzes about the recall schemes of Arnold and Enron

Fri Oct 10, 6:35 PM ET

By Howard Blume
LA Weekly Writer

Call it the most electric scandal yet to circulate about the governor-elect. As the story goes, Arnold Schwarzenegger (news - web sites) conspired with energy barons in May 2001 to help them keep $9 billion in ill-got gains amassed by manipulating the California energy market.

The evil plan?

Recall Gray Davis (news - web sites) that well-known tiger for consumers.


They also had to keep Lieutenant Governor Cruz Bustamante (news - web sites) from replacing Davis for their machinations to triumph. To do that, the conspirators would tar Bustamante for accepting campaign donations from Indians (instead of from Enrons Ken Lay).


Great plot line. And plausible in a world where weapons of mass destruction vanish like a mirage and where theres a billion a week to spend in Iraq (news - web sites), but nary a dime for universal health coverage at home. But this scenario, though it rattles a skeleton in Schwarzeneggers closet, fails to put meat on those bones. The real question marks regarding Schwarzeneggers energy policy concern his future actions, not his past ones.


The au courant spin comes from journalist Greg Palast, author of The Best Democracy Money Can Buy, whose online Arnold tell-all has become one of the Internets hottest forwards. The alleged smoking gun is a May 17, 2001, meeting that included Enron chairman Kenneth Lay, Arnold Schwarzenegger and others. This date fell during the latter part of the energy crisis, just after Lieutenant Governor Bustamante filed suit, as a private citizen, against energy providers. So far, so true.


The meeting itself is apparently verified by internal Enron e-mails obtained by the Santa Monicabased Foundation for Taxpayer & Consumer Rights. But from this point, Palast employs freewheeling speculation or at least he has yet to cite a source or document suggesting otherwise. Palast calls the meeting a "tryst between Marias husband and the corporate con men," namely Lay and "convicted stock swindler Mike Milken." Palast writes: "It turns out that Schwarzenegger knowingly joined the hush-hush encounter as part of a campaign to sabotage a Davis-Bustamante plan to make Enron and other power pirates then ravaging California pay back the $9 billion."


Palasts understanding of historical context is just plain off.


In May of 2001, Davis was more than a year away from re-election, and his re-election was no sure thing. So concocting a recall was premature to say the least, or at least out of sequential order. And to suggest a "Davis-Bustamante plan" completely overlooks the mutual enmity between a guv and lite guv who were barely on speaking terms.


Meanwhile, Bustamantes two energy-related lawsuits have gone nowhere, despite Palasts praise of Bustamantes "cojones" for bringing them on. A well-placed source in state government asserts in an interview that Bustamantes suit, though still active, has been a "non-factor" in attempts to collect from Enron, Dynegy et al. When the lawsuits were filed, cynics regarded Bustamantes litigation as rsum building for his 2006 campaign for governor. When that campaign arrived early because of the recall Bustamante predictably praised his lawsuits for helping to bring the energy giants to heel, a claim the government source characterized as "complete horseshit."


In other words, the litigation may not, in fact, be the "biggest single threat to Ken Lay and the electricity lords," as Palast would have it.


Consumer advocate Douglas Heller takes a middling view. "Its a good lawsuit, one that we had talked about filing ourselves," says Heller, senior consumer advocate with the Foundation for Taxpayer & Consumer Rights. "Litigation takes a while." Heller declines to take Palast to task, but he also makes no grand conspiracy claim based on the e-mails. "I dont know if Palast has documents other than the ones we gave him," he says diplomatically.




The documents do offer compelling insights, even without leaping to a Schwarzenegger conspiracy. Ken Lays trip to California came at the height of the energy crisis. "We had had three sets of rolling blackouts, the third a week and a half prior to the meeting," recounts Heller. "The price of electricity had skyrocketed by about 1,000 percent. Californians were now paying the highest electricity bills in the nation. And one of the big utilities had filed for bankruptcy protection, while the other was pleading for a bailout in the state Legislature. Enron was still flying high. It had a great quarter."


CEO Lay had recently met with Vice President Dick Cheney (news - web sites) in Washington meetings about which Cheney still refuses to release information. Those encounters, notes Heller, are more compelling and important than Schwarzeneggers presence at the L.A. confab.


Lay did indeed have a California agenda, but Schwarzenegger was not apparently a major part of it. The obvious target was then-Mayor Richard Riordan. An e-mail briefing describes Riordan to Lay as "a very wealthy Republican businessman who has been term-limited out and has not yet made public his future political aspirations (a bid for governor has been mentioned by insiders)."


This rundown, from an Enron public-affairs specialist, continues: "You might congratulate him on helping to settle the Writers Guild strike and ask if hed now like to resolve the energy crisis. (Hes in a bit of a spat with Dave Freeman over who can claim credit for LADWPs success during this energy situation see attached L.A. Times article). You can say youve been told that he was one of the clearer heads during the deregulation process and [was] instrumental in keeping DWP out of the regulatory mess. This is an opportunity for Riordan to help broker a solution, and thats why youre calling him . . . Explain about our comprehensive solution business support is critical to garner political support."


The memo lists 25 potential invitees for Riordan to bring together with Lay in L.A., including prominent Democrats such as billionaire philanthropist Eli Broad. Schwarzenegger isnt on the list, suggesting that he was added by Riordan or Riordans staff. In a later e-mail, a list of 13 "attendees" does not include Broad, but does mention Schwarzenegger and Milken.

The evidence indicates an agenda more obvious and direct than recalling Davis. "I think Lay and Enron were desperately looking for support for their deregulation agenda that had fallen into utter disrepute in California," says Heller. "I believe that Ken Lay knew there were some big problems ahead of him potentially. He was probably here, as the e-mails say, to shore up business-community support."

The Weeklys Bill Bradley (news - web sites) concluded as much in a November 2001 article six months after the meeting based on a source familiar with what transpired. Lay, wrote Bradley, sought "to enlist high-level support for the continuation of deregulation in California. He also criticized the just-enacted state power authority . . . He also stressed that deregulation can work, that prices for electricity can begin to moderate from their skyrocketing levels."

At the time, the focus on Riordan was prescient, because he shortly thereafter became the front-runner for the Republican gubernatorial nomination. Despite a thumbs-up from George W. Bush, Riordan lost out to the more conservative Bill Simon Jr. after a series of attack ads paid for by Governor Gray Davis.

Riordan apparently also had invited Simon to the meeting with Lay, but the e-mails imply Simon didnt show up. So did Lay have enough of a crystal ball to see past Riordan, past the emergence of Simon, and past a thousand other occurrences of chance and fate to the future requisite of a Davis recall?

Ken Lay aint that smart, as his own companys collapse aptly demonstrates.

Still, some legitimate questions remain for Governor Schwarzenegger. "All we know is that he met with Ken Lay," says Heller. "But what does he think about Lay and what he and his company did in California? Did they discuss the future of deregulation? Would he support legislation to re-regulate the system? Would he continue efforts against these companies? These are not lascivious details of actions on a movie set. These are issues that hit Californians pocketbooks."


Schwarzenegger has said that he doesnt remember the meeting with Lay, and as a candidate he was habitually short on specifics. Riordan also has not commented about the meeting. And the Weekly was unable to get more specifics from Palast about other evidence he may possess.

The states pursuit of energy providers continues, mainly under the aegis of the state Attorney Generals Office. "Weve got $9 billion worth of refund claims pending before the Federal Energy Regulatory Commission (news - web sites) that are based on gaming, withholding of power and violations of rules," says A-G spokesman Tom Dresslar. "Separately, were pursuing civil-enforcement actions in the courts for violations of antitrust laws, charging illegal rates and unlawful business practices, to name a few examples of misconduct."

Voters did not recall Attorney General Bill Lockyer, who has no intention of abandoning these efforts. If the Bush-appointed federal commission, as expected, fails to side with California, Lockyer is prepared to appeal in court. Governor Davis was largely an ally on this front, along with a broad coalition that includes the state Public Utilities Commission (news - web sites) and the states largest investor-owned utilities Southern California Edison (news - web sites) and Pacific Gas & Electric.

Schwarzeneggers position on these efforts is unclear. Palast predicts that the new governor will, as allegedly planned, bless "sweetheart settlements with the power companies." And "when that happens, Bustamantes court cases are probably lost."

Its worth noting that critics accused Gray Davis of any number of sweetheart deals with power companies. And he blessed a few settlements himself. Still, Palasts concern about fair refunds for California is widely shared because the feds are indeed willing to settle the states claims for pennies on the dollar. The counterattack, however, has been driven by Attorney General Lockyer and his own partners in litigation, not by Bustamantes legal action, said state sources.

The Governors Office does hold sway over the states expensive long-term energy contracts. Davis had a difficult time renegotiating these deals, which were made under duress during the energy crisis. Theres not much more Schwarzenegger could do to sweeten the contracts for these providers, even if he wanted to. Nor could he do much for Lay or Enron, which for their part have been recalled to oblivion.
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Old Oct 15th, 2003, 04:37 AM       
He might have done a better job getting the message out there if he didn't use this article exposing an Arnie scandal as a forum to send praise for his Democratic opposition. I don't know enough about this to say for sure, but maybe his approach is outshadowing his expertise in uncovering damning information.

The typical voter wasn't considering this stuff when heading to the polls, but it sounds like it could have, and should have been far more damaging then the Hitler/Molester accusations.
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Old Oct 15th, 2003, 04:54 PM       
When an article says "nary a dime for universal health coverage", I quit reading it.
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Old Oct 15th, 2003, 05:01 PM       
Why must I constantly be inundated with California's problems? What have we learned here? The recall process works and now California is probably getting stuck with an even more incompetent governor that they previously had. Is that pretty much the jist of it?
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Old Oct 15th, 2003, 08:19 PM       
no
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Old Oct 15th, 2003, 08:47 PM       
I hate to say it, but I have to agree with kellygayos. :/

If Arnold is at least perceived to be a success is California, it could alter the political alignment in California. California is a BIG fucking state, and tends to be a "trend setter," as they proudly boast.

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When an article says "nary a dime for universal health coverage", I quit reading it.
Hmmm, funny. I tend to do the same thing when I see your posts. :/
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Old Oct 15th, 2003, 09:40 PM       
http://www.onlinejournal.com/Special...03leopold.html

Emails show Enron may have influenced FERC probe on California power crisis, refunds

By Jason Leopold
Online Journal Assistant Editor

October 15, 2003—Did bankrupt energy company Enron Corp. influence a controversial decision federal energy regulators made in November 2000, saying California wasn't entitled to more than $3 billion in refunds from power companies who allegedly gamed the state's wholesale electricity market?

About two dozen of the more than one million Enron emails dealing with California's energy crisis, recently released by the Federal Energy Regulatory Commission (FERC), appear to make a strong case that the one-time high-flying energy company had some role in influencing the FERC decision three years ago—a major blow to California consumers and two of the state's investor-owned utilities that were teetering on the brink of bankruptcy. Utilities in California lost billions of dollars buying high-cost power on the wholesale market and selling it at a loss under a state mandated rate freeze.

The issue is of particular importance now because California's newly elected Republican governor, Arnold Schwarzenegger, has indicated through aides that he would try to quickly settle a number of the lawsuits the state has pending before FERC and the 9th Circuit Court of Appeals, many of which name Enron as a defendant.

Governor-elect Schwarzenegger secretly met with Ken Lay at the Peninsula Hotel in Beverly Hills in May 2001 to listen to Lay pitch solutions for the state's energy crisis. During the recall campaign, Bill Forman, the news editor at the Sacramento News & Review asked Schwarzenegger about the meeting. Schwarzenegger said he didn't recall meeting Ken Lay because there were more than 30 people in the room. If Schwarzenegger plans to fix the state's budget he better brush up on his basic math skills. According to a list of attendees uncovered by the consumer group Foundation for Taxpayer and Consumer Rights, there were 13 people at the meeting, including Schwarzengger.

Moreover, Schwarzenegger met privately with Lay and former Los Angeles Mayor Richard Riordan for about 15 minutes to discuss ways Schwarzenegger and Riordan could help solve the state's power crisis, according to one of Riordan's former deputies, who spoke on condition of anonymity because he still works with Riordan. Riordan has been named to Schwarzenegger's transition team

The bigger issue, however, has to do with a ruling handed down by FERC on Nov. 1, 2000, related to the sky-high wholesale power prices that wreaked havoc in much of the state between May and October of that year. Then Gov. Gray Davis, along with dozens of other state officials, charged that energy companies conspired to drive up electricity prices in the state by using a variety of schemes to game the market. The November 2000 investigation by FERC was the first probe into California's power crisis. The commission conducted a second investigation in mid-2001.

During the 2000 investigation, the Republican dominated FERC investigated the issue of high electricity prices and said the wholesale market structure in California is "seriously flawed" but FERC found no significant evidence that power sellers or providers manipulated prices. Instead, the report blamed the state's mandated market structure for the summer's power shortages and rising prices.

In some of the Enron emails FERC posted on its website, Enron executives talk about meetings they held with FERC staff prior to the report on California's power crisis being released publicly and how they were unsure if "everything we want" will be included in the commission's report.

"We were very involved in the discussions of the report with FERC staff," said James Steffes, Enron's former Vice President of Governmental Affairs, in an email to Karen Denne, Enron's vice president of communications who still works at the company. "I am not sure, however, if everything we want will be in the report. We will monitor very closely."

During the months leading up to the FERC report, the commission received a presentation from Timothy Belden, one of Enron's former top traders, who pleaded guilty in October 2002 to federal conspiracy charges that he manipulated California's electricity market to drive up prices and maximize profit for Enron.

After Belden's presentation to FERC, Mary Hain, one of Enron's in-house lawyers, sent an email out to a dozen Enron executives (but not former Chairman Ken Lay or Chief Executive Jeff Skilling) saying Belden sent a presentation to Scott Miller, a FERC investigator who was in charge of the California power probe, and answered questions for Miller over the telephone.

"According to the head of the investigation Scott Miller, the staff got alot more out of this meeting than Staff's previous meetings with the (utilities) and the generators. Based on the numerous phone calls I've been getting, the Staff is looking into the data we provided,"[sic] Hain's email says.

Hain also gave a presentation to FERC, based largely on Belden's presentation materials, advocating Enron's argument that the surging energy prices were due to scarcity of supply, the Financial Times reported in October 2002.

"I have also attached a revised version of the presentation that Tim sent to Scott Miller on Friday," Hain's email said. "Tim's version conveys the same message but takes a different approach to conveying the message. On Friday, Tim talked to Scott and answered some additional questions. Tim said that Enron is in favor of eliminating the mandatory (Power Exchange) buying requirement and would like the [utilities] to be able to buy from Enron Online. He also explained more fully the existence of scarcity."

The Power Exchange reference relates to the now defunct California Power Exchange, the market where electricity was bought and sold in the state. It's interesting that Hain's email refers to the Power Exchange because when FERC issued its report on Nov. 1, 2000, it ordered the Power Exchange to shut down and told buyers and sellers of power to use EnronOnline, a trading platform operated by the energy giant that helped the company report record profits the following year. Those profits, however, were largely illusory.

Enron had long believed that the Power Exchange was a threat to its profits. In May 1999, during the infancy of deregulation in California, Enron first experimented with market manipulation by submitting a bid at the Power Exchange for 2,900 megawatts on a transmission line that only has a capacity of 15 megawatts.

The Power Exchange said Enron congested the Silver Peak Line, which runs from the Central Valley to San Diego. Deliberately congesting the transmission line produced higher prices for power during the time.

The Power Exchange spent a year investigating the issue and in May 2000 found Enron in violation of the state's rules for trading electricity.

Enron agreed to pay the Power Exchange $25,000 to settle the issue without admitting or denying the charges. However, Enron's Hain sent out an email in February 2000 to company executives saying Enron's scheme likely cost California upwards of $47 million.

The interesting thing about the conversations Enron had with FERC and vice versa in regard to the commission's probe of California's electricity crisis is that the communication may have been illegal. According to FERC's own governing rules, the commission is not permitted to discuss pending issues with anyone outside the commission.

No member of the body comprising the agency, administrative law judge, or other employee who is or may reasonably be expected to be involved in the decisional process of the proceeding, shall make or knowingly cause to be made to any interested person outside the agency an ex-parte communication relevant to the merits of the proceeding. A member of the body comprising the agency, administrative law judge, or other employee who is or may reasonably be expected to be involved in the decisional process of such proceeding who receives, or who makes or knowingly causes to be made, a communication prohibited by this subsection shall place that communication on the public record of the proceeding."

A spokesman for FERC would not return messages, first left at the commission on Oct. 6, seeking comment for this story, nor would a spokesperson for Enron.

It's unclear whether Enron had any correspondence with FERC commissioners about the investigation. However, Jeff Dasovich, an Enron government relations executive, said in a Sept. 12, 2000, email to Staffes, his boss, that FERC's Republican chairman, Curt Hebert, went up to Dasovich after a panel discussion on California's power crisis and "lobbied me hard to support" FERC's proposal to break up the country's power grid into regional transmission companies, a plan that Enron abhorred.

Hebert resigned as FERC chairman in 2001. Hebert reportedly opposed a request by Enron's former Chairman Ken Lay to allow Enron greater access to the interstate power grid, prompting Lay to say he would no longer support the Mississippian as FERC chairman. Hebert said he resigned after two of George W. Bush's FERC appointees, Pat Wood and Nora Brownwell, came aboard at FERC and began to outvote him on the five-member panel. In 2001, Brownwell and Wood pushed through a regulation that would penalize electric companies that don't join multi-state regional power grids, a proposal pushed by Enron but opposed by Hebert.

The correspondence between FERC and Enron in 2000 confirms what many of California officials said at the time, that FERC failed to do its job to keep a watchful eye on energy companies and protect consumers. Enron's influence at the highest levels of government may have cost California more than $3 billion in electricity overcharges between May 2000 and November 2000. California is currently fighting for those refunds at the 9th U.S. Circuit Court of Appeals.

Schwarzenegger is aggressively pursuing a plan to push California electricity market closer toward deregulation, which Gov. Davis halted two years ago when the crisis spiraled out of control. He said he plans to shut down at least one of California's energy agencies and will fire dozens of Davis' energy advisers in favor of his own handpicked team of free-market conservatives.

Schwarzenegger cannot thrust California into deregulation or the state may find itself dealing with another electricity crisis. He needs to take baby steps and test the waters. But even then, there's no guarantee that a competitive electricity market will bring lower electricity prices for consumers. If the state were saddled with another energy debacle it's likely that FERC still won't be able to rescue consumers or hold power companies accountable.

An August report by the General Accounting Office makes this point clear. The GAO, in its report, criticized FERC because the agency doesn't have the power to protect consumers from the side effects of deregulation, such as soaring electricity and natural gas prices, which ended up costing California more than $70 billion and bankrupted the state's largest utility, Pacific Gas & Electric Co.

Jason Leopold spent two years covering California's electricity crisis and the Enron bankruptcy as bureau chief of Dow Jones Newswires. He is writing a book about California's electricity crisis.
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The_Rorschach The_Rorschach is offline
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Old Oct 16th, 2003, 04:13 AM       
"Schwarzenegger is aggressively pursuing a plan to push California's electricity market closer toward deregulation. . ."

Maybe he isn't quite so daft I as originally believed.
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Old Oct 18th, 2003, 02:51 AM       
http://www.consumerwatchdog.org/util...p/rp003709.pdf

PDF version of the now infamous Enron e-mails.....
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Old Oct 19th, 2003, 03:52 PM       
http://www.gregpalast.com/detail.cfm?artid=286&row=0

Told'ya So
Yurica Report

Wednesday, October 15, 2003

I am deeply unhappy to report on the accuracy of our report on the success of Ken Lay's plan to have his governor, Mr. Schwarzenegger, sabotage state lawsuits against the electricity cartel.

The following is just in from journalist Katherine Yurica:

Arnold to Settle Lawsuits for Pennies on the Dollar

The Yurica Report has learned that only three days after Mr. Schwarzenegger won his victory in California, an aide announced that the governor-elect intends to settle pending energy fraud lawsuits. This apparently includes the suit filed by Cruz Bustamante under the California statute, Civil Code section 17200 ,of the Unfair Practices Act. The purpose of the act “is to safeguard the public against the creation or perpetuation of monopolies and to foster and encourage competition” the Act expressly prohibits, “unfair, dishonest, deceptive, destructive, fraudulent and discriminatory practices by which fair and honest competition is destroyed or prevented.”

According to news talk show host Bernie Ward of KGO radio, San Francisco, who reported the story Friday night on his radio show, (October 10th), Schwarzenegger's aid stated that the governor-elect's administration did not want to be saddled with someone else's lawsuits. The Unfair Practices Act, however, has provisions that require businesses who profit from unfair practices to pay the victims those profits. Although the Act does not authorize recovery of damages in a representative action, according to Hiliary N. Rowen, an attorney from the law firm of Thelen Reid & Priest, “the plaintiff—who need not have been harmed by the challenged conduct—may seek injunctive and restitutionary relief, including the disgorgement of profits on behalf of all those injured.” (See Hiliary Rowen's article) .This provision would make the power companies, who profited an estimated $9 billion from the California energy scam, the losers.

In the meantime, Claire Cooper of the Sacramento Bee reported Friday on another lawsuit in the Federal Court. She reported the judges from the 9th U.S. Circuit Court of Appeals seemed skeptical of the Federal Energy Regulatory Commission's (FERC) “ contention that it acted legally three years ago, when it relied on competition among energy wholesalers to determine the cost of California's power supply and did not require them to file the rates they would charge.” California sued FERC, claiming it is due a refund of $9 billion in gouged profits because the Federal Power Act didn't authorize FERC to approve a fluctuating marketbased rate structure. The question is, does the governor-elect intend to settle the federal suit also?

Mr. Schwarzenegger's announcement to settle the lawsuits comes on the heels of an article written on the eve of the election by investigative reporter Greg Palast. Palast, whose reports appear on BBC television’s Newsnight, said that the Los Angeles-based Foundation for Taxpayer and Consumer Rights uncovered Enron internal memos regarding Mr. Schwarzenegger's secret meeting in May 2001 with the disgraced CEO of Enron, Kenneth Lay. The intent of the power company, according to Palast, was to sabotage the Davis-Bustamante plan to win back the $9 billion dollars in illegal profits earned by power moguls. The plan has worked so far. Clearly, Mr. Schwarzenegger should be questioned about his actions.

http://www.yuricareport.com/
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