 
UntrueDeath
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The tale of the Brits who swiped 800 jobs from New York, carted
off $90 million, then tonight, turned off our lights
<a href='http://www.workingforchange.com/article.cfm?ItemID=15459' target='_blank'>http://www.workingforchange.com/article.cf...fm?ItemID=15459</a>
by Greg Palast
Palast is author of the New York Times bestseller, "The Best
Democracy Money Can Buy" (Penguin USA) and the worstseller,
"Democracy and Regulation," a guide to electricity deregulation
published by the United Nations (with T. MacGregor and J.
Oppenheim).
I can tell you all about the ne'er-do-wells that put out our
lights tonight. I came up against these characters -- the Niagara
Mohawk Power Company -- some years back. You see, before I was a
journalist, I worked for a living, as an investigator of
corporate racketeers. In the 1980s, "NiMo" built a nuclear plant,
Nine Mile Point, a brutally costly piece of hot junk for which
NiMo and its partner companies charged billions to New York
State's electricity ratepayers.
To pull off this grand theft by kilowatt, the NiMo-led consortium
fabricated cost and schedule reports, then performed a Harry
Potter job on the account books. In 1988, I showed a jury a memo
from an executive from one partner, Long Island Lighting, giving
a lesson to a NiMo honcho on how to lie to government regulators.
The jury ordered LILCO to pay $4.3 billion and, ultimately, put
them out of business.
And that's why, if you're in the Northeast, you're reading this
by candlelight tonight. Here's what happened. After LILCO was
hammered by the law, after government regulators slammed Niagara
Mohawk and dozens of other book-cooking, document-doctoring
utility companies all over America with fines and penalties
totaling in the tens of billions of dollars, the industry leaders
got together to swear never to break the regulations again. Their
plan was not to follow the rules, but to ELIMINATE the rules.
They called it "deregulation."
It was like a committee of bank robbers figuring out how to make
safecracking legal.
But they dare not launch the scheme in the USA. Rather, in 1990,
one devious little bunch of operators out of Texas, Houston
Natural Gas, operating under the alias "Enron," talked an
over-the-edge free-market fanatic, Britain's Prime Minister
Margaret Thatcher, into licensing the first completely
deregulated power plant in the hemisphere.
And so began an economic disease called "regulatory reform" that
spread faster than SARS. Notably, Enron rewarded Thatcher's
Energy Minister, one Lord Wakeham, with a bushel of dollar bills
for 'consulting' services and a seat on Enron's board of
directors. The English experiment proved the viability of Enron's
new industrial formula: that the enthusiasm of politicians for
deregulation was in direct proportion to the payola provided by
power companies.
The power elite first moved on England because they knew
Americans wouldn't swallow the deregulation snake oil easily. The
USA had gotten used to cheap power available at the flick of
switch. This was the legacy of Franklin Roosevelt who, in 1933,
caged the man he thought to be the last of the power pirates,
Samuel Insull. Wall Street wheeler-dealer Insull creator of the
Power Trust, and six decades before Ken Lay, faked account books
and ripped off consumers. To frustrate Insull and his ilk, FDR
gave us the Federal Power Commission and the Public Utilities
Holding Company Act which told electricity companies where to
stand and salute. Detailed regulations limited charges to real
expenditures plus a government-set profit. The laws banned "power
markets" and required companies to keep the lights on under
threat of arrest -- no blackout blackmail to hike rates.
Of particular significance as I write here in the dark,
regulators told utilities exactly how much they had to spend to
> insure the system stayed in repair and the lights stayed on.
> Bureaucrats crawled along the wire and, like me, crawled through
> the account books, to make sure the power execs spent customers'
> money on parts and labor. If they didn't, we'd whack'm over the
> head with our thick rule books. Did we get in the way of these
> businessmen's entrepreneurial spirit? Damn right we did.
>
> Most important, FDR banned political contributions from utility
> companies -- no 'soft' money, no 'hard' money, no money PERIOD.
>
> But then came George the First. In 1992, just prior to his
> departure from the White House, President Bush Senior gave the
> power industry one long deep-through-the-teeth kiss good-bye:
> federal deregulation of electricity. It was a legacy he wanted to
> leave for his son, the gratitude of power companies which ponied
> up $16 million for the Republican campaign of 2000, seven times
> the sum they gave Democrats.
>
> But Poppy Bush's gift of deregulating of wholesale prices set by
> the feds only got the power pirates halfway to the plunder of Joe
> Ratepayer. For the big payday they needed deregulation at the
> state level. There were only two states, California and Texas,
> big enough and Republican enough to put the electricity market
> con into operation.
>
> California fell first. The power companies spent $39 million to
> defeat a 1998 referendum pushed by Ralph Nadar which would have
> blocked the de-reg scam. Another $37 million was spent on
> lobbying and lubricating the campaign coffers of legislators to
> write a lie into law: in the deregulation act's preamble, the
> Legislature promised that deregulation would reduce electricity
> bills by 20%. In fact, when San Diegans in the first California
> city to go "lawless" looked at their bills, the 20% savings
> became a 300% jump in surcharges.
>
> Enron circled California and licked its lips. As the number one
> life-time contributor to the George W. Bush campaign, it was
> confident about the future. With just a half dozen other
> companies it controlled at times 100% of the available power
> capacity needed to keep the Golden State lit. Their motto, "your
> money or your lights." Enron and its comrades played the system
> like a broken ATM machine, yanking out the bills. For example, in
> the shamelessly fixed "auctions" for electricity held by the
> state, Enron bid, in one instance, to supply 500 megawatts of
> electricity over a 15 megawatt line. That's like pouring a gallon
> of gasoline into a thimble -- the lines would burn up if they
> attempted it. Faced with blackout because of Enron's destructive
> bid, the state was willing to pay anything to keep the lights on.
>
> And the state did. According to Dr. Anjali Sheffrin, economist
> with the California state Independent System Operator which
> directed power movements, between May and November 2000, three
> power giants physically or "economically" withheld power from the
> state and concocted enough false bids to cost the California
> customers over $6.2 billion in excess charges.
>
> It took until December 20, 2000, with the lights going out on the
> Golden Gate, for President Bill Clinton, once a deregulation
> booster, to find his lost Democratic soul and impose price caps
> in California and ban Enron from the market.
>
> But the light-bulb buccaneers didn't have to wait long to put
> their hooks back into the treasure chest. Within seventy-two
> hours of moving into the White House, while he was still sweeping
> out the inaugural champagne bottles, George Bush the Second
> reversed Clinton's executive order and put the power pirates back
> in business in California. Enron, Reliant (aka Houston
> Industries), TXU (aka Texas Utilities) and the others who had
> economically snipped California's wires knew they could count on
> Dubya, who as governor of the Lone Star state cut them the
> richest deregulation deal in America.
>
> Meanwhile, the deregulation bug made it to New York where
> Republican Governor George Pataki and his industry-picked utility
> commissioners ripped the lid off electric bills and relieved my
> old friends at Niagara Mohawk of the expensive obligation to
> properly fund the maintenance of the grid system.
>
> And the Pataki-Bush Axis of Weasels permitted something that must
> have former New York governor Roosevelt spinning in his
> wheelchair in Heaven: They allowed a foreign company, the
> notoriously incompetent National Grid of England, to buy up NiMo,
> get rid of 800 workers and pocket most of their wages - producing
> a bonus for NiMo stockholders approaching $90 million.
>
> Is tonight's black-out a surprise? Heck, no, not to us in the
> field who've watched Bush's buddies flick the switches across the
> globe. In Brazil, Houston Industries seized ownership of Rio de
> Janeiro's electric company. The Texans (aided by their
> Frenchpartners) fired workers, raised prices, cut maintenance
> expenditures and, CLICK! the juice went out so often the locals
> now call it, "Rio Dark."
>
> So too the free-market cowboys of Niagara Mohawk raised prices,
> slashed staff, cut maintenance and CLICK! -- New York joins
> Brazil in the Dark Ages.
>
> Californians have found the solution to the deregulation
> disaster: re-call the only governor in the nation with the
> cojones to stand up to the electricity price fixers. And unlike
> Arnold Schwarzenegger, Gov. Gray Davis stood alone against the
> bad guys without using a body double. Davis called Reliant Corp
> of Houston a pack of "pirates" --and now he'll walk the plank for
> daring to stand up to the Texas marauders.
>
> So where's the President? Just before he landed on the deck of
> the Abe Lincoln, the White House was so concerned about our brave
> troops facing the foe that they used the cover of war for a new
> push in Congress for yet more electricity deregulation. This has
> a certain logic: there's no sense defeating Iraq if a hostile
> regime remains in California.
>
> Sitting in the dark, as my laptop battery runs low, I don't know
> if the truth about deregulation will ever see the light --until
> we change the dim bulb in the White House.
>
> -----
>
> See Greg Palast's award-winning reports for BBC Television and
> the Guardian papers of Britain at www.GregPalast.com. Contact
> Palast at his New York office: media@gregpalast.com.
>
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