Report Warns of Enron All Over Again As Governor Jerry Brown And Electricity Deregulation Era Fixers Poised To Rip Off California Ratepayers

Published on

Los Angeles, CA— California leaders are being pressed by former allies of Enron and energy traders who ripped off the state to gamble away California’s energy future on the revival of a plan for a Western regional power trading system that will benefit billionaires and Wall Street and put ratepayers and the environment at risk, Consumer Watchdog finds in a new report.

The report reveals that legislation reauthorizing an Enron-era law, AB 813, authored by Assembly Member Chris Holden and to be heard Tuesday in the California Senate, is a scheme that will leave the market open to trading manipulation that will raise electricity rates. The plan will also undermine California’s control of carbon emissions and pollution from power plants by empowering Trump appointees to overturn California laws.

Read the report, Betting Against The House: How California’s Leaders Could Gamble Away Our Energy Future On A Western Power Trading Casino, at  https://consumerwatchdog.org/sites/default/files/2018-06/BettingAgainstTheHouse.pdf

“Why would Californians support such a plan?” the report asks. “It’s backed by Governor Jerry Brown, a coterie of his former and current appointees, fixers for energy billionaires, and remarkably, representatives of ‘mainstream environmental groups’ such as such as the Natural Resources Defense Council’s Ralph Cavanagh that once promoted Enron.”

The report reveals, for example, that Cavanagh, the chief backer of the Western trading scheme now and of deregulation in the late 1990s, vouched for Enron, claiming, “Can you trust Enron? On stewardship issues and public benefit issues…the answer is yes.”  

The report also uncovers a private recording of one of the principal backers of the legislation acknowledging the danger to California’s environmental laws from Trump appointees at the Federal Energy Regulatory Commission (FERC) under the plan.

“Billionaire investors such as Warren Buffett, energy companies, and Wall Street banks see big profits off power exports to California, including coal power, that a regional power trading market would facilitate,” author Liza Tucker wrote. “They see big opportunities in building expensive new transmission lines underwritten largely by Californians to vastly expand a speculative commodities market in which contracts for electricity, whether dirty or clean, are bought and sold like pork bellies.

“But giving up control over California’s own power grid threatens new forms of Enron-style market manipulation that led to California’s disastrous energy crisis two decades ago, rolling blackouts, shrinking clean energy and efficiency investments, and a tab of some $40 billion to Californians,” the report states. “When traders run the casino, the house always wins and consumers are left at great risk.”

The report finds:

•California would no longer run its own electricity market. Legal challenges and federal preemption over interstate energy pricing could force California to buy dirty power generated in other coal-heavy states when the state’s three major investor-owned utilities are on track to generate half their retail sales from green energy sources by 2020, and today are largely free of coal. The Federal Energy Regulatory Commission, appointed by President Trump, has the power to dictate the market’s rules.

•Wall Street would profit at the expense of Californians. Since 2009, California ratepayers have paid $700 million for losses created via trading of an obscure financial instrument pegged to California power transmission rights. A Western regional market will only open up California to more sophisticated forms of the price-gouging that may already be occurring in California’s electricity market.

•California ratepayers could represent 70 percent of a regional market’s power demands, depending on how many Western states join. So, Californians could end up paying the lion’s share for multibillion-dollar transmission lines built in Wyoming, for example, to facilitate billionaires’ wind and coal power exports. These same dollars could fund renewable energy installations in California that are clean, local, and enhance the state’s energy security.

Instead of the current board of directors appointed by California’s governor, regulation and control of a new regional market would fall to self-appointed energy industry insiders with possible conflicts of interest, like those that ran California’s trading market during deregulation and turned a blind eye to price manipulation.

•California utilities could profit by importing cheap, dirty coal power and trading contracts for fossil-fuel power with distant Western states from vastly overbuilt gas-fired power plants at the expense of ratepayers. They could avoid contracting for more renewable energy on the theory that it will be cheaper to import but with no guarantee that it will ever materialize.

The report finds that the fixers pushing legislation to create this trading market include:

•Ralph Cavanagh of NRDC who vouches today for a Western wholesale power market just as he vouched for Enron and deregulation as a way to bring public benefits to California and accelerate a shift to renewable energy and increased efficiency.

•Dana Williamson, Brown’s former cabinet secretary, continues to push for the legislation, together with Cavanagh. Williamson was director of public affairs at Pacific Gas & Electric (PG&E) when Governor Brown appointed her and now runs her own firm. PG&E backed deregulation two decades ago, filed for bankruptcy during the crisis, and foisted its collateral damage onto ratepayers. Williamson served as deputy political director for Gray Davis’s re-election campaign in 2001-2002, and then served as deputy communications director. Davis was recalled in 2003 in the wake of the energy crisis.

•Board members of California’s current independent system operator that would be subsumed into running a regional system include energy industry insiders who have made money off energy markets or businesses and no rules prevent them from profiting personally off of a Western regional market. They include energy trader and former CEO of Deutsche Bank’s London global markets division during deregulation, Mark Ferron.

•Warren Buffett has a vested interest in selling power produced from dirty coal power plants as owner of PacifiCorp, a giant utility holding company serving millions of customers in six Western states that generates two thirds of its power from coal.

•Would-be green energy barons such as billionaire Philip Anschutz see California as a way to justify exporting wind and coal power at inflated prices over new and expensive transmission lines that Californians would largely underwrite.

•Don Furman—former lieutenant for Warren Buffett’s coal-heavy power companies—has peddled a slideshow on the Western power market that is thin on facts and thick on rhetoric that a Western power market will lower costs, pollution, and create jobs. In a private tape recorded phone conference, however, Furman candidly acknowledges that Trump appointees to FERC will fight to invalidate California laws should the Western market be created, which would undermine environmental and consumer protections.

•The three major investor-owned utilities benefitted from administrative and legislative favors under Governor Jerry Brown while donating nearly $10 million together with 23 other energy companies to Brown’s campaigns, pet causes, ballot initiatives, and to the California Democratic Party between 2009 and 2016. Brown’s sister, Kathleen Brown, sits on Sempra’s board and has collected more than $1 million in cash and stock since 2013 for her work.

Liza Tucker
Liza Tucker
Liza Tucker is a consumer advocate for Consumer Watchdog, following everything from oil and gas to the regulation of toxic substances in the state of California. She comes to us from Marketplace, the largest U.S. broadcast show on business and economics heard by ten million listeners each week on 400 radio stations. Liza worked at this public radio show for a decade, first as Commentary Editor and then as Senior Editor for both Washington and Sustainability News.

Latest Energy Videos

Video thumbnail
KABC-LA, CA: Lawmakers Should Prevent Refineries from Selling Expensive Summer Blend of Gas Overseas
02:58
Video thumbnail
KPIX-SF (CBS) - San Francisco, CA: California Gas Prices Are Soaring Again
00:32
Video thumbnail
KCAL-LA - Los Angeles, CA: Gas Prices Skyrocketing
02:52
Video thumbnail
KTLA-LA (CW) - Los Angeles, CA: So Cal Gas Prices Nearing $6 a Gallon
03:20
Video thumbnail
Spectrum News 1 (San Fernando Valley) - Los Angeles, CA: Controversy Over Gas Storage Facility
03:50
Video thumbnail
KFMB-SD (CBS) - San Diego, CA: Gas Tax Increase Takes Effect July 1st
03:23
Video thumbnail
CBS 8 - Los Angeles, CA: What You Need to Know About Gas Prices
02:02
Video thumbnail
KGO-SF (ABC) - San Francisco, CA: BottleBank Update, Is It Really Effective?
02:39
Video thumbnail
Senator Portantino, Shame on You
01:18
Video thumbnail
Senator Portantino: Protect Our Communities From Oil Drillers
00:51
Video thumbnail
KERO-BFL (ABC) - Bakersfield, CA; Oil Drilling Near Homes Can Cause Health and Safety Concerns
03:06
Video thumbnail
KNBC - LA, CA; Consumer Watchdog's Liza Tucker On New Concerns With Santa Susana Field Lab Clean Up
04:09
Video thumbnail
(ABC) - LA, CA; SoCal Edison's New Income Based Proposed Charges Might Not Be As Stable As They Seem
02:40
Video thumbnail
(CBS)-Fresno, CA; Victory For Californians As Bill Passes That Will Regulate Profits Of Oil Refiners
02:17
Video thumbnail
CNBC - Jamie Court Speaks About The Bill That Would Penalize Oil Refineries For Price Gouging
06:39
Video thumbnail
KXTV(ABC) - Sacramento, CA; Governor Newsom Announced A New Deal With Lawmakers To Take On Big Oil
02:56
Video thumbnail
KNBC-LA (NBC) - Los Angeles, CA; Holding Utility Companies Accountable For Power Outages
02:01
Video thumbnail
Consumer Watchdog at CA Senate Energy Cmte 2 22 23
50:54
Video thumbnail
KFMB CW - San Diego, CA; Oil Companies Need to be Held Accountable for High Gas Prices
02:42
Video thumbnail
KTTV (FOX) - Los Angeles, CA; Recap Of Jamie Court's Testimony At The Senate Hearing For Gas Prices
05:07
Video thumbnail
KGTV(ABC) - SD, CA; Jamie Court Will Testify at the Price Gouging Hearing for Rising Gas Prices
01:17
Video thumbnail
KTTV-LA (FOX) - Los Angeles, CA; SoCal Gas Bill Sticker Shock
04:24
Video thumbnail
Spectrum News 1 - Los Angeles, CA; Who Is SoCal Gas Buying Their Gas From?
09:18
Video thumbnail
Why SoCal Gas is at Fault For Doubling Your Natural Gas Bill
01:43
Video thumbnail
KNBC - Los Angeles, CA; Spike In Natural Gas Prices
02:32
Video thumbnail
KCBS - Los Angeles, CA; New Year, New Pain At The Pump
03:02
Video thumbnail
KCAL - Los Angeles, CA; Jamie Court Says We are Being Gouged By SoCal Gas
02:18
Video thumbnail
KTTV (FOX) - Los Angeles, CA; Jamie Court Weighs In On Astronomically High SoCal Gas Bills
04:29
Video thumbnail
KCAL- LA, CA; What's Behind The Gas Price Jump And Simple Changes That Could Save You Some Money
02:49
Video thumbnail
Spectrum News 1 - Los Angeles, CA; SoCal Gas Is Blaming Price Hikes On A Cold Snap
09:35
Video thumbnail
KCAL- Los Angeles, CA; SoCal Gas Price Hikes Has To Do With Mismanagement
01:10
Video thumbnail
Spectrum News 1 - Los Angeles, CA; Jamie Court Says There's More To The SoCal Price Hike
03:10
Video thumbnail
Consumer Watchdog President Jamie Court Testifies About Need for Windfall Profits Cap in California
05:36
Video thumbnail
Californians Need a Rebate From Gasoline Price Gouging
02:34
Video thumbnail
Senate Bill 1322 Takes On The Golden State Gouge
01:06
Video thumbnail
CBS Evening News: Jamie Court on Gas Prices Hitting 5 Year High
01:40
Video thumbnail
KNBC: Jamie Court Explains the Spike in Gas Prices
02:23
Video thumbnail
KTTV-GDLA: Jamie Court Explains California's High Gas Prices
04:34
Video thumbnail
SPECTRUM NEWS1: Challenges Redeeming Recyclables in California
02:56
Video thumbnail
SPECTRUM NEWS1: California Stores Preventing Bottle Deposit Redemption
08:55
Video thumbnail
KCAL: Santa Monica's Last Recycling Center is Closing
00:38
Video thumbnail
KABC: New Gas Tax to be Enacted on July 1st
02:22
Video thumbnail
KTVU Fox: Consumer Watchdog Urges Governor Newsom to Fire Oil Regulators With Conflicts of Interests
00:46
Video thumbnail
SPECTRUM NEWS 1: DOGGR Regulator Fired Over Conflicts of Interest and Increased Oil Drilling Permits
03:06
Video thumbnail
KABC: FBI Raids LADWP Office and City Attorney's Office Over Billing Scandal Cover-Up
02:07
Video thumbnail
KABC: The Largest Chain of Recycling Centers in CA is Closing Down
02:14
Video thumbnail
ABC KOFY: CA's Recycling Crisis Worsens After Largest Chain of Recycling Centers Close
02:08
Video thumbnail
ABC KXTV: rePlanet Closes Entire Chain Of Recycling Centers
00:38
Video thumbnail
KRON: rePlanet Recycling Centers Shut Down Statewide
02:03

Latest Energy Releases

Energy In The News

Latest Energy Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More energy Releases