Wednesday, May 05, 2004

Hasta la Vista to $9 Billion

The news last fall:

"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."

... How's that working for ya so far? Now fast forward and, oh look! ... " it appears that Schwarzenegger’s staff is also operating under a veil of secrecy. On April 27, Schwarzenegger’s aides released a letter the governor wrote to Michael Peevey, president of the California Public Utilities Commission, in which Schwarzenegger called for the state to return to a fully competitive, deregulated electricity market. A copy of the letter can be found at

In a teleconference with reporters Wednesday, April 28, to discuss the plan, one of Schwarzenegger’s aides (who instructed reporters that his name could not be used for attribution) was asked who advised Gov. Schwarzenegger on his energy plan.

The aide refused to disclose the names of the individuals the governor met with nor would he say how many meetings took place before Schwarzenegger formulated an energy policy. The aide would only say that the governor had “many, many” meetings with consumer groups, legislators and experts in the energy sector.

But officials with three of California’s most prominent consumer rights groups, all of whom spent the past four years at the forefront debate surrounding the state’s energy issues, said they never met with Gov. Schwarzenegger or anyone from his staff to discuss the governor’s future electricity plans for the state.

“We never met with him, never,” said Bob Finkelstein, the executive director of The Utility Reform Network, a San Francisco based consumer. “Either somebody in (Schwarzenegger’s) office decided they knew what the consumer groups were going to say about his plan or the governor came to the conclusion that he didn’t care about consumers.”

Finkelstein said consumer groups are wary of Schwarzenegger’s energy plan because it calls for a complete return to retail competition, which was supposed to reduce electricity costs for consumers and businesses, but ended up costing the state as much as $70 billion due to a flawed design that allowed energy companies to manipulate the market.

“It’s almost 10 years to the day since we unleashed competition in California,” Finkelstein said. “If we do it again following the same pattern history will repeat itself and we can’t afford to do that again.”

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