BAILOUT WATCH: Keeping an eye on the energy industry and the politicians
Bailout Watch #52 – Jun 07, 2001
Supply and Demand politics. With pressure mounting on federal lawmakers to step into the breach and enact price controls on electricity, the deregulation supporters in DC realized that the proposed reforms might pass the House, so (in the spirit of sticking it to California) Energy Committee Chair Billy Tauzin (Louisiana) tabled the bill. Interestingly, Tauzin, who called the decision to jettison the bill "tactical" as well as "practical," said the legislation was no longer necessary because, as we predicted they would say (see Bailout Watch #51), prices are going down. The energy companies will use blackouts when they want something (see BWs #39, #23) and they will lower prices modestly when they want to stop something.
Does the energy industry have special access to the President? It’s not exactly a surprise that the Oil Men in the White House maintain close ties to energy companies, including those that have been abusing California. But the relationship between senior Bush-Cheney advisors and energy cos. is more than just about old business alliances, according to recent reports in the Los Angeles Times and the New York Times. These revelations help explain why the White House has declared war on California in crafting an national energy policy that reads like an industry wish list. How can the Bush administration protect us from the energy industry when the Bush administration is the energy industry?
* Clay Johnson, Bush’s personnel chief, has invested more than $100,000 in El Paso Energy Partners, whose parent corporation, El Paso Corp., is the subject of investigations for manipulating natural gas supplies. Johnson also holds more than $50,000 in Duke Power bonds, according to the reports.
* Karl Rove, Bush’s chief advisor, owns more than $100,000 in stock in Enron — one company that has enjoyed legendary access to the President.
* Lawrence Lindsey, chief economic coordinator for the president, was paid $50,000 dollars last year as a consultant for Enron.
Speaking of energy industry influence… A recent study by the Center for Public Integrity exposes how Edison, PG&E and SDG&E got the Cal. Legislature to deregulate electricity to their advantage in 1996. According to CPI, California’s three big utilities flooded Sacramento politicians, lobbyists and consultants with gifts and cash totaling $69 million between 1994 and 2000, including $39 million to defeat the 1998 utility deregulation reform initiative, Prop. 9). Topping the list of the utilities’ darlings, Governor Davis got $633,299 in campaign contributions. Other lawmakers got goodies like industry-funded junkets around the globe, such as deregulation author Senator (then-Assemblyman) Jim Brulte’s 1996 European trip. Ironically, the utilities have been driven to bankruptcy by the very deregulation law they wrote. But despite the companies’ complaints of impoverishment, somehow they scrounge up enough to continue greasing the wheels. In the first quarter of 2001, PG&E spent $644,000 on lobbying and Edison spent $340,000. When you consider that deregulation has netted the utilities and energy companies billions of dollars in profits, they got an astounding return on their investment. And with continued talk of a $10 billion bailout, the utilities’ latest gifts might pay off just as well. (Read the CPI report)
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