Perspectives on Recall: Schwarzenegger and Ken Lay Meeting

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Institute for Public Accuracy

Consumer advocates with the Foundation for Taxpayer and Consumer Rights, Doug Heller and Carmen Balber said today: “The California energy crisis was the culmination of a decade-long push to remove consumer protections and regulatory oversight of California’s electric power system… Leading the charge was Ken Lay, the former CEO and Chairman of Enron, whose close ties with the Bush family were supplemented by campaign contributions both in Washington and across the country, notably including more than $100,000 to California Governor Gray Davis. It was, of course, no surprise that Governor Davis failed to meaningfully take on the power industry’s manipulation of the California energy market during the crisis, opting instead to sign overpriced power contracts and force consumers and taxpayers to pay for the miserable failure of deregulation. Although Californians lambasted Davis for his unwillingness to stand up to the power companies, people also knew that Ken Lay and his ilk were to blame for the billions of dollars that were being siphoned out of the state on a monthly basis.

“In order to counter the virtual public consensus that deregulation ought to be dumped, Ken Lay, during the spring of 2001, began a series of high-powered meetings to salvage the deteriorating argument for his energy scheme…. He met privately with Vice President Cheney in the days leading up to the administration’s publication of what became an extremely Enron-friendly National Energy Plan. Successful on the national front as a result of his longstanding relationship with key Republicans, Lay hoped to regain his footing in California by forging ties with prominent Republicans in the state. In May of 2001, Lay convened a private meeting with junk bond king Michael Milken, Los Angeles’ then-Mayor Richard Riordan and Arnold Schwarzenegger, at which Lay reportedly presented his vision of solving the state’s energy deregulation crisis by, absurd as it sounds, expanding deregulation. The meeting, about which the public still knows very little, may become a major issue now that Schwarzenegger is no longer just a Republican movie star…”
DOUG HELLER, [email protected],
CARMEN BALBER, [email protected]

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