A bogeyman is an imaginary monster used to frighten children. The deregulation bogeyman has been revived by mainstream journalists in California to frighten the adult public about California Public Utility Commission Chairman Michael Peevey’s proposal to enact what is called “direct access” to electricity markets in California instead of having to buy power through regulated monopolies (Edison, PG&E, SDG&E) or municipal power companies (LADWP, SMUD, etc.).
Syndicated California columnist Thomas Elias is out with another of his hate big corporations columns against the proposal for “direct access.” Elias writes in the Colusa County Sun Herald paper:
“…Schwarzenegger doesn’t give a fig about California ’s millions of consumers. Rather, it assures that he will be remembered as one who did the bidding of big business, especially those big businesses who donated money to his various campaign committees.
All it takes is a look at Peevey’s record to see all this. For Peevey, a former president of Edison International, parent company of the Southern California Edison Co., has turned the PUC into a rogue agency whose actions sometimes defy both state law and all logic except that of corporate welfare.” Back in 2002, after an energy crunch that saw criminal market manipulation cause rolling blackouts and skyrocketing electricity and natural gas prices, state legislators decided they did not soon want to see another deregulation scheme remotely like the one that led to the crisis.
So they passed a law banning competition between the state’s major utility companies and independent power generators until 2017, when the last of the power contracts signed under duress by the state in 2001 will expire.
It’s that simple: No deregulation for at least eight more years. That also means no “direct access,” where electric generators sell directly to business or residential consumers and bypass the utilities, as Enron and other companies tried to do in the late 1990s.
Peevey’s PUC doesn’t care about that law. The agency, which in 1996 pushed for the previous, failed deregulation scheme, now wants to revive direct access. Commissioners voted last spring to examine ways in which they might reinstate it. Even though residential consumers might technically be allowed to buy power directly from generators, the real world would see almost all such deals involve electricity customers that use very large quantities of power. Think oil refineries, factories, universities, large office complexes.
Those large users could negotiate price guarantees, so in times of shortage they would pay the same price as before, while residential users must pay higher prices for power produced by small-scale generating plants that generally come online only in times of high consumption.”
It’s a system of corporate welfare, favoring big companies over the little guy. Which is the same direction where Peevey has steered the PUC in regulating cell phones and natural gas, too.”
Source: http://www.colusa-sun-herald.com/articles/left_1601_tcnsyndication__article.html/arnold_one.html
Tuesday’s (Dec. 16) Editorial of the San Francisco Chronicle reverberates Elias’s bias:
“During the deregulation debacle of 2000-01, the state scrambled to keep the lights on by buying overpriced contracts on the open market. Today, the state is in fiscal emergency. It would be foolhardy for us to take expensive risks from which the state may not be able to save us.”
Source: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/12/12/ED6F14MF8T.DTL&type=printable
Newspaper journalists know that to be successful you have to write what you think people want to hear, not the truth. The above sentiments by the mainstream media are likely to resonate with the myriad of left-liberal newspaper readers in California but it hardly describes the reality of the 2001 California Energy Crisis which was not caused by deregulation or Enron. This writer ought to know after having served on the Energy Crisis Task Force in 2001 for the largest water utility in the state.
Below is a column this writer wrote in 2005 entitled “Enron – The Movie: “Ask Why” Journalists Are the Dumbest Guys in the Room.” The title is a play on words about the biased movie and book “Enron: The Smartest Guys in the Room” and Enron’s corporate slogan “Ask Why?” After read the article below, answer for yourself whether you still believe that electricity deregulation and/or Enron caused the California Energy Crisis of 2001.
Enron - The Movie. 'Ask Why' Journalists Are the Dumbest Guys in the Room.
Written by Wayne Lusvardi
Thursday, April 28, 2005
“In reporting the news…journalists could, in theory, choose from billions of potential activities. In fact, however, they can learn about only a tiny fraction of potential activities…Walter Lippman pointed out that ‘the facts we see depend on where we are placed and the habits of our eyes.’”
-- Sociologist Herbert J. Gans, Deciding What’s News
The tabloids, newspapers, and the Net are abuzz with the announcement of the release of the new “documentary” film by Alex Gibney, “Enron: The Smartest Guys in the Room,” after the book by the same name by Bethany McLean and Peter Elkind, journalists for Fortune Magazine. Gibney is the co-director of the film The Trials of Henry Kissinger which makes the case that Henry Kissinger should be put on trial for Vietnam War era crimes.
Net journalists and bloggers are having a feeding frenzy writing about release of the movie. At 1115.org, a leftist website run by Peter Lance, an investigative reporter, novelist, and screenwriter, a web journalist named Matt writes:
“As a Californian, I was one of the people who was (were) swindled by Enron’s manipulation of the western energy grid and power plants. During 2000 and 2001, Californians faced energy shortages that led to rotating blackouts on several occasions, massive price increases due to gunpoint negotiating, and eventually the toppling of Governor Gray Davis who took the fall for the pain inflicted upon our state by Enron.”
This is the conventional spin on the Enron story. But is there another story behind that story? The movie, Enron-The Smartest Guys in the Room, puts a spot light on Enron’s corporate motto: “Ask Why?” As this author participated on the energy crisis task force in 2001 for a large California governmental water agency, the spin of the Enron books and film don’t square with all the facts from where I sat behind the scenes. This is not to deny that Enron cooked its books, committed securities fraud, and pulled off some strange energy trading maneuvers. But if you go see this movie you may need to “Ask Why” the following questions were not also posed in this purportedly objective “documentary:”
- If Enron caused the wild escalation of electricity prices and rolling blackouts in California in 2001, why did it have less than a 5% share of the market and why was it active in the California market for only 6 months before it pulled out? (http://www.chronwatch.com/content/contentDisplay.asp?aid_1213&catcode=33)
- Why, at the peak of the California electricity crisis, was Enron blamed, on tapes released to the media by Shohomish County Utility District, for shutting down a 52 megawatt power plant in Nevada and wheeling out of California 400 megawatts of power when the crisis on that day was not a power shortage but congestion? Enron’s curtailment of imported electricity and exporting of surplus power thus would have relieved, not worsened, pressure on the state energy grid as well as on prices (see “Withholding Power is Good for You During a Congested Market,” ChronWatch, Feb. 10, 2005 – http://www.chronwatch/com/content/contentDisplay.asp?aid_12972&catcode=33&mode=
- Why would the media spin on Enron’s withholding 52 megawatts of power, comprising only 1/10th of one percent of the peak market demand for electricity during a period of congestion, be that it was manipulating the market? (see “Enron Shutdown of Power Plant Didn’t Mean DiddlySquat to California Crisis?” http://www.chronwatch.com/content/contentDisplay.asp?aid- 12920&catcode=33&mode=
- Why did Shohomish County Utility District in “blue” political territory in the State of Washington, which released tapes allegedly proving Enron manipulated the market, refuse to pay Enron $120 million for electricity it consumed thus helping Enron’s house of cards to fall?
- Why didn’t the California Public Utilities Commission (CPUC) and other energy regulatory agencies, warn governmental agencies and public utilities to buy rate risk insurance going into the highly risky deregulation scheme in California?
- Why did California energy regulators design deregulation so that energy trades had to stop at the California border, thus cheaper out of state energy could not be purchased to lower prices during the crisis? Why did the CPUC tack on a “competitive transition charge” on all transactions while at the same time placing a cap on the price of electricity? When Enron crossed this regulatory boundary line and shipped power in and out of the State of California as the only way to get around these dysfunctional rules to lower prices to consumers, why was this later considered “gaming the system?” (see “Withholding Power is Good for you During Congested Market,” ChronWatch, February 10, 2005 http://www.chronwatch/com/content/contentDisplay.asp?aid_12972&catcode=33&mode=
- Why did the media paint every energy company as price gougers when companies like Mirant Energy were the unsung heroes of the California crisis by generating nearly 3/5th’s of the power for Northern California , which was where the crisis was centered? (see “The Unsung heroes of the California Energy Crisis,” ChronWatch, January 29, 2005 http://www.chronwatch.com/content/contentDisplay.asp?aid=12705&catcode=33mode=
- Why didn’t the media fail to report that Caltrans ordered a reduction in capacity of an interstate natural gas pipeline at Carlsbad that supplies fuel to power plants, resulting in a ripple effect of less available gas during the crisis?
- Why didn’t the press give equal coverage to the “ratcheting” trading practices of Reliant Energy, which puffed up natural gas prices? Reliant was the major gas supplier to the L.A. Department of Water and Power which reaped a windfall by selling its cheap hydropower when prices spiked due to Reliant’s manipulations?
- Why did California energy regulators in an all-Democratic Party controlled legislature and governorship put caps on the price of retail electricity at the peak of the crisis resulting in the price of wholesale electricity exceeding the retail price and in utilities hemorrhaging billions in losses? If it were not for the adoption of these price controls would Enron’s house of cards have fallen?
- Why weren’t Enron’s links to the Clinton administration equally portrayed? (see http://talking_points.tripod.com/enron/id9.html).
While selling the public a popular scandal story about big business, mainstream media has basically given a free pass to the complicity of government in the California electricity crisis of 2001; and, for all we know, even in the collapse of Enron’s house of cards. Given the limitations of what mainstream media knows about what actually happened with the California electricity crisis of 2001, all that you’re really getting when you read the newspapers, pop books or view the movies about Enron is someone’s skewed leftist worldview or schadenfreude (malicious pleasure) in the failure of capitalism.
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