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October 05, 2003
A New And Even Better Reason To Vote Against The Recall And For Cruz Bustamante On Tuesday: Arnold's Direct Involvement In A Plot To Sabotage The Lawsuit Against The California Energy Crooks

Reminder: NO on the Recall. Yes on Cruz Bustamante. (No on Prop 54.)

As I suspected, this Recall is more about trying to quash a lawsuit against the crooks that took the people of California for 9 Billion dollars than anything else.

Greg Palast has done his homework again. Read on.

Arnold Unplugged - It's hasta la vista to $9 billion if the Governator is selected

By Greg Palast.


It's not what Arnold Schwarzenegger did to the girls a decade back that should raise an eyebrow. According to a series of memoranda our office obtained today, it's his dalliance with the boys in a hotel room just two years ago that's the real scandal...

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...

But Bush's boys on the commission have a problem. The evidence against the electricity barons is rock solid: fraudulent reporting of sales transactions, megawatt "laundering," fake power delivery scheduling and straight out conspiracy (including meetings in hotel rooms).

So the Bush commissioners cook up a terrific scheme: charge the companies with conspiracy but offer them, behind closed doors, deals in which they have to pay only two cents on each dollar they filched.

Here is the full text of the article in case the link goes bad:

http://www.gregpalast.com/printerfriendly.cfm?artid=283



Arnold Unplugged - It's hasta la vista to $9 billion if the Governator is selected
Friday, October 3, 2003

It's not what Arnold Schwarzenegger did to the girls a decade back that should raise an eyebrow. According to a series of memoranda our office obtained today, it's his dalliance with the boys in a hotel room just two years ago that's the real scandal.

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.

But Bush's boys on the commission have a problem. The evidence against the electricity barons is rock solid: fraudulent reporting of sales transactions, megawatt "laundering," fake power delivery scheduling and straight out conspiracy (including meetings in hotel rooms).

So the Bush commissioners cook up a terrific scheme: charge the companies with conspiracy but offer them, behind closed doors, deals in which they have to pay only two cents on each dollar they filched.

Problem: the slap-on-the-wrist refunds won't sail if the Governor of California won't play along. Solution: Re-call the Governor.

New Problem: the guy most likely to replace Davis is not Mr. Musclehead, but Cruz Bustamante, even a bigger threat to the power companies than Davis. Solution: smear Cruz because -- heaven forbid! -- he took donations from Injuns (instead of Ken Lay).

The pay-off? Once Arnold is Governor, he blesses the sweetheart settlements with the power companies. When that happens, Bustamante's court cases are probably lost. There aren't many judges who will let a case go to trial to protect a state if that a governor has already allowed the matter to be "settled" by a regulatory agency.

So think about this. The state of California is in the hole by $8 billion for the coming year. That's chump change next to the $8 TRILLION in deficits and surplus losses planned and incurred by George Bush. Nevertheless, the $8 billion deficit is the hanging rope California's right wing is using to lynch Governor Davis.

Yet only Davis and Bustamante are taking direct against to get back the $9 billion that was vacuumed out of the state by Enron, Reliant, Dynegy, Williams Company and the other Texas bandits who squeezed the state by the bulbs.

But if Arnold is selected, it's 'hasta la vista' to the $9 billion. When the electricity emperors whistle, Arnold comes -- to the Peninsula Hotel or the Governor's mansion. The he-man turns pussycat and curls up in their lap.

I asked Mr. Muscle's PR people to comment on the new Enron memos -- and his strange silence on Bustamante's suit or Davis' petition. But Arnold was too busy shaving off his Hitlerian mustache to respond.

The Enron memos were discovered by the Foundation for Taxpayer and Consumer Rights, Los Angeles,
www.ConsumerWatchdog.org

Posted by Lisa at 10:28 PM
August 27, 2003
GAO Blames Vice President For Interfering With Investigation


GAO: Cheney Hindered Probe

The Cheney energy plan called for expanded oil and gas drilling on public land and easing regulatory barriers to building nuclear power plants.
By the Associated Press.


Congressional investigators say they were unable to determine how much the White House's energy policy was influenced by the oil industry because they were denied documents by Vice President Dick Cheney about his energy task force.

Investigators also came up short trying to find out how much money various agencies spent on creating the national energy policy, a General Accounting Office report released Monday said.

The unwillingness of Cheney's office to turn over records and other information "precluded us from fully achieving our objectives" and limited its analysis, the GAO said...

Last December, a federal judge rebuffed congressional efforts to gather information about meetings that Cheney's energy task force held with industry executives and lobbyists while formulating the administration's energy plan.

The judge said the lawsuit filed by Comptroller General David Walker against the vice president was an unprecedented act that raised serious separation-of-powers issues between the executive and legislative branches of government. The comptroller general runs the GAO...

The Cheney energy plan called for expanded oil and gas drilling on public land and easing regulatory barriers to building nuclear power plants. Among the proposals: drilling in the Arctic wildlife refuge and possibly reviving nuclear fuel reprocessing, which was abandoned in the 1970s as a nuclear proliferation threat.

Here is the full text of the article in case the link goes bad:

http://www.cbsnews.com/stories/2003/08/26/politics/main570137.shtml

GAO: Cheney Hindered Probe

WASHINGTON, Aug. 26, 2003


Dick Cheney (Photo: AP)


The Cheney energy plan called for expanded oil and gas drilling on public land and easing regulatory barriers to building nuclear power plants.


(AP) Congressional investigators say they were unable to determine how much the White House's energy policy was influenced by the oil industry because they were denied documents by Vice President Dick Cheney about his energy task force.

Investigators also came up short trying to find out how much money various agencies spent on creating the national energy policy, a General Accounting Office report released Monday said.

The unwillingness of Cheney's office to turn over records and other information "precluded us from fully achieving our objectives" and limited its analysis, the GAO said.

The GAO unsuccessfully sued the vice president last year to release information.

The Energy and Interior departments and the Environmental Protection Agency reviewed the GAO's report before it was released and chose not to comment. The vice president's office declined to look at it, the GAO said.

The National Energy Policy Development Group, chaired by Cheney, was formed by President Bush in January 2001 to develop a national energy policy.

The task force submitted its final report in May 2001. Congress is now considering the energy-related legislative proposals.

The GAO said the task force's report was the "product of a centralized, topdown, short-term, and labor-intensive process that involved the efforts of several hundred federal employees government wide."

In the few months between the start of the energy task force and its presentation of the final report, the vice president, some Cabinet-level and other senior administration officials and support staff controlled most of the report's development, according to the GAO.

They met frequently with energy industry representatives and only on a limited basis with scholars and environmentalists, the GAO said. The extent to which any of these meetings or information obtained from the energy industry influenced policy can't be determined, based on limited information made available to the GAO, the report said.

Two Democratic presidential candidates, Sens. John Kerry of Massachusetts and Bob Graham of Florida, on Tuesday criticized the administration for failing to release the energy task force documents and called on Cheney to produce the records.

"As gas prices reach historic levels and the nation's energy infrastructure is pushed beyond its limits, the Bush administration has decided their energy policy will be of the special interests, by the special interests and for the special interests," Kerry said in a statement.

Said Graham: "If the Bush-Cheney team has nothing to hide, then why are they hiding documents? There can be only one answer — they don't want the American people to know just how much influence the big oil companies have over U.S. energy policy."

Last December, a federal judge rebuffed congressional efforts to gather information about meetings that Cheney's energy task force held with industry executives and lobbyists while formulating the administration's energy plan.

The judge said the lawsuit filed by Comptroller General David Walker against the vice president was an unprecedented act that raised serious separation-of-powers issues between the executive and legislative branches of government. The comptroller general runs the GAO.

Some Democratic congressmen requested information in the spring of 2001 about which industry executives and lobbyists the Cheney task force was meeting with in creating the Bush administration's energy plan.

The Cheney energy plan called for expanded oil and gas drilling on public land and easing regulatory barriers to building nuclear power plants. Among the proposals: drilling in the Arctic wildlife refuge and possibly reviving nuclear fuel reprocessing, which was abandoned in the 1970s as a nuclear proliferation threat.

Posted by Lisa at 08:25 AM
August 21, 2003
Arnie In On California Energy Scam?

Arnie and Kenneth Lay and Dick Cheney had meetings together during the California Energy Crisis/Scandal. How interesting.

Ahnuld, Ken Lay, George Bush, Dick Cheney and Gray Davis
By Jason Leopold for Commondreams.org.


Arnold Schwarzenegger isn’t talking. The Hollywood action film star and California’s GOP gubernatorial candidate in the state’s recall election has been unusually silent about his plans for running the Golden State. He hasn’t yet offered up a solution for the state’s $38 billion budget deficit, an issue that largely got more than one million people to sign a petition to recall Gov. Gray Davis.

More important, however, Schwarzenegger still won’t respond to questions about why he was at the Peninsula Hotel in Beverly Hills two years ago where he, former Los Angeles Mayor Richard Riordan and junk bond king Michael Milken, met secretly with former Enron Chairman Kenneth Lay who was touting a plan for solving the state’s energy crisis. Other luminaries who were invited but didn’t attend the May 24, 2001 meeting included former Los Angeles Laker Earvin “Magic” Johnson and supermarket magnate Ron Burkle.

While Schwarzenegger, Riordan and Milken listened to Lay’s pitch, Gov. Davis pleaded with President George Bush to enact much needed price controls on electricity sold in the state, which skyrocketed to more than $200 per megawatt-hour. Davis said that Texas-based energy companies were manipulating California’s power market, charging obscene prices for power and holding consumers hostage. Bush agreed to meet with Davis at the Century Plaza Hotel in West Los Angeles on May 29, 2001, five days after Lay met with Schwarzenegger, to discuss the California power crisis.


Lisa's voting NO on the Recall and YES on Cruz Bustamante.

Here is the full text of the article in case the link goes bad:

http://www.commondreams.org/views03/0817-07.htm

Ahnuld, Ken Lay, George Bush, Dick Cheney and Gray Davis
By Jason Leopold
CommonDreams.org

Sunday 17 August 2003

Arnold Schwarzenegger isn’t talking. The Hollywood action film star and California’s GOP gubernatorial candidate in the state’s recall election has been unusually silent about his plans for running the Golden State. He hasn’t yet offered up a solution for the state’s $38 billion budget deficit, an issue that largely got more than one million people to sign a petition to recall Gov. Gray Davis.

More important, however, Schwarzenegger still won’t respond to questions about why he was at the Peninsula Hotel in Beverly Hills two years ago where he, former Los Angeles Mayor Richard Riordan and junk bond king Michael Milken, met secretly with former Enron Chairman Kenneth Lay who was touting a plan for solving the state’s energy crisis. Other luminaries who were invited but didn’t attend the May 24, 2001 meeting included former Los Angeles Laker Earvin “Magic” Johnson and supermarket magnate Ron Burkle.

While Schwarzenegger, Riordan and Milken listened to Lay’s pitch, Gov. Davis pleaded with President George Bush to enact much needed price controls on electricity sold in the state, which skyrocketed to more than $200 per megawatt-hour. Davis said that Texas-based energy companies were manipulating California’s power market, charging obscene prices for power and holding consumers hostage. Bush agreed to meet with Davis at the Century Plaza Hotel in West Los Angeles on May 29, 2001, five days after Lay met with Schwarzenegger, to discuss the California power crisis.

At the meeting, Davis asked Bush for federal assistance, such as imposing federally mandated price caps, to rein in soaring energy prices. But Bush refused saying California legislators designed an electricity market that left too many regulatory restrictions in place and that’s what caused electricity prices in the state to skyrocket. It was up to the governor to fix the problem, Bush said. However, Bush’s response appears to be part of a coordinated effort launched by Lay to have Davis shoulder the blame for the crisis. It worked. According to recent polls, a majority of voters grew increasingly frustrated with the way Davis handled the power crisis. Schwarzenegger has used the energy crisis and missteps by Davis to bolster his standing with potential voters. While Davis took a beating in the press (some energy companies ran attack ads against the governor), Lay used his political clout to gather support for deregulation.

A couple of weeks before Lay met with Schwarzenegger in May 2001, the PBS news program “Frontline” interviewed Vice President Dick Cheney, whom Lay met with privately a month earlier. Cheney was asked by a correspondent from Frontline whether energy companies were acting like a cartel and using manipulative tactics to cause electricity prices to spike in California.

“No,” Cheney said during the Frontline interview. “The problem you had in California was caused by a combination of things--an unwise regulatory scheme, because they didn't really deregulate. Now they’re trapped from unwise regulatory schemes, plus not having addressed the supply side of the issue. They've obviously created major problems for themselves and bankrupted PG&E in the process.”

A month before the Frontline interview and Bush’s meeting with Davis, Cheney, who chairs Bush’s energy task force, met with Lay to discuss Bush’s National Energy Policy. Lay, whose company was the largest contributor to Bush’s presidential campaign, made some recommendations that would financially benefit his company. Lay gave Cheney a memo that included eight recommendations for the energy policy. Of the eight, seven were included in the final draft. The energy policy was released in late May 2001, after Schwarzenegger, Riordan and Milken met with Lay and after the meeting between Bush and Davis and Cheney’s Frontline interview.

The policy made only scant references to California's energy crisis, which Enron was accused of igniting, and did not indicate what should be done to provide the state some relief. Cheney said the policy focused on long-term solutions to the country's energy needs, such as opening up drilling in the Arctic National Wildlife Refuge and freeing up transmission lines. That's why California was ignored in the report, Cheney said.

What’s unknown to many of the voters who will decide Davis’s fate on Oct. 7, the day of the recall election, is that while Cheney dismissed Davis’s accusations that power companies were withholding electricity supplies from the state, one company engaged in exactly the type of behavior that Davis described. But Davis would never be told about the manipulative tactics the energy company engaged.

In a confidential settlement with the Federal Energy Regulatory Commission, whose chairman was appointed by Bush a year earlier, Tulsa, Okla., based-Williams Companies agreed to refund California $8 million in profits it reaped by deliberately shutting down one of its power plants in the state in the spring of 2000 to drive up the wholesale price of electricity in California.

The evidence, a transcript of a tape-recorded telephone conversation between an employee at Williams and an employee at a Southern California power plant operated by Williams, shows how the two conspired to jack up power prices and create an artificial electricity shortage by keeping the power plant out of service for two weeks.

Details of the settlement had been under seal by FERC for more than a year and were released in November after the Wall Street Journal sued the commission to obtain the full copy of its report. Similarly, FERC also found that Reliant Energy engaged in identical behavior around the same time as Williams and in February the commission ordered Reliant to pay California a $13.8 million settlement.

Had the evidence been released in 2001 when Davis accused energy companies of fraud it would have helped California’s case and voters may have viewed the governor more positively. But if FERC were to publicly release the details of the Williams settlement it wouldn't have jibed with Bush's energy policy, which was made public instead in May 2001. It's highly unlikely that Bush, Cheney and members of the energy task force were kept in the dark about the Williams scam, especially since the findings of the investigation by FERC took place around the same time the policy was being drafted.

But Davis was still causing problems for Lay. California’s power woes had a ripple effect, forcing other states to cancel plans to open up their electricity markets to competition fearing deregulation would lead to widespread blackouts and price gouging. For Enron, a company that generated most of its revenue from buying and selling power and natural gas on the open market, such a move would paralyze the company.

Fearing that Davis would take steps to re-regulate California’s power market that Lay spent years lobbying California lawmakers to open up to competition, Lay recruited Schwarzenegger, Riordan, Milken, and other powerful business leaders like Bruce Karatz, chief executive of home builder Kaufman & Broad; Ray Irani, chief executive of Occidental Petroleum; and Kevin Sharer, chief executive of biotech giant Amgen.

The 90-minute secret meeting Lay convened took place inside a conference room at the Peninsula Hotel. Lay, and other Enron representatives at the meeting, handed out a four-page document to Schwarzenegger, Riordan and Milken titled “Comprehensive Solution for California,” which called for an end to federal and state investigations into Enron’s role in the California energy crisis and said consumers should pay for the state’s disastrous experiment with deregulation through multibillion rate increases. Another bullet point in the four-page document said “Get deregulation right this time -- California needs a real electricity market, not government takeovers.”

The irony of that statement is that California’s flawed power market design helped Enron earn more than $500 million in one year, a tenfold increase in profits from a previous year and it’s coordinated effort in manipulating the price of electricity in California, which other power companies mimicked, cost the state close to $70 billion and led to the beginning of what is now the state’s $38 billion budget deficit. The power crisis forced dozens of businesses to close down or move to other states, where cheaper electricity was in abundant supply, and greatly reduced the revenue California relied heavily upon.

Lay asked the participants to support his plan and lobby the state Legislature to make it a law. It’s unclear whether Schwarzenegger held a stake in Enron at the time or if he followed through on Lay’s request. His spokesman, Rob Stutzman, hasn’t returned numerous calls for comment about the meeting. For Schwarzenegger and the others who attended the meeting, associating with Enron, particularly Ken Lay, the disgraced chairman of the high-flying energy company, during the peak of California’s power crisis in May 2001 could be compared to meeting with Osama bin Laden after 9-11 to understand why terrorism isn’t necessarily such a heinous act.

A person who attended the meeting at the Peninsula, which this reporter wrote about two years ago, said Lay invited Schwarzenegger and Riordan because the two were being courted in 2001 as GOP gubernatorial candidates. A week before the meeting, Davis signed legislation to create a state power authority that would buy, operate and build power plants in lieu of out-of-state energy companies, such as Enron, that the governor alleged was ripping off the state.

For Enron’s Lay, the timing of the meeting was crucial. His company was just five months away from disintegrating and he was doing everything in his power to keep his company afloat and the profits rolling in.

It wasn’t until Enron collapsed in October 2001 and evidence of the company’s manipulative trading tactics emerged that FERC began to take a look at the company’s role in California’s electricity crisis. Since then, memos written by former Enron traders were uncovered, with colorful names like “Fat Boy” and “Death Star,” that contained the blueprint for ripping off California.

Enron’s top trader on the West Coast, Timothy Belden, the mastermind behind the scheme, pleaded guilty in December to conspiracy to commit wire fraud and has agreed to cooperate with federal investigators who are still trying to get to the bottom of the crisis.

California is still demanding that FERC order the energy companies to refund the state $8.9 billion for overcharging the state for electricity during its yearlong energy crisis. But FERC says California is due no more than $1.2 billion in refunds because the state still owes the energy companies $1.8 billion in unpaid power bills.

Davis, who refused to cave in to the demands of companies like Enron even while Democrats, Republicans and the public criticized him, was right all along. Maybe Californians ought to cut Davis some slack.

-------

Jason Leopold (jasonleopold@hotmail.com) spent two years covering California's energy crisis as bureau chief of Dow Jones Newswires. He is currently working on a book about the crisis.

Posted by Lisa at 07:25 AM
August 16, 2003
Greg Palast Connects The Dots Between Deregulation And This Week's Huge East Coast Blackout

Power Outage Traced to Dim Bulb in White House
The Tale of The Brits Who Swiped 800 Jobs From New York, Carted Off $90 Million, Then Tonight, Turned Off Our Lights
By Greg Palast.

California fell first. The power companies spent $39 million to defeat a 1998 referendum pushed by Ralph Nadar which would have blocked the de-reg scam. Another $37 million was spent on lobbying and lubricating the campaign coffers of the state's politicians to write a lie into law: in the deregulation act's preamble, the Legislature promised that deregulation would reduce electricity bills by 20%. In fact, when in the first California city to go "lawless," San Diego, the 20% savings became a 300% jump in surcharges.

Enron circled California and licked its lips. As the number one contributor to the George W. Bush campaigns, it was confident about the future. With just a half dozen other companies it controlled at times 100% of the available power capacity needed to keep the Golden State lit. Their motto, "your money or your lights."

Enron and its comrades played the system like a broken ATM machine, yanking out the bills. For example, in the shamelessly fixed "auctions" for electricity held by the state, Enron bid, in one instance, to supply 500 megawatts of electricity over a 15 megawatt line. That's like pouring a gallon of gasoline into a thimble -- the lines would burn up if they attempted it. Faced with blackout because of Enron's destructive bid, the state was willing to pay anything to keep the lights on...

Californians have found the solution to the deregulation disaster: re-call the only governor in the nation with the cojones to stand up to the electricity price fixers. And unlike Arnold Schwarzenegger, Gov. Gray Davis stood alone against the bad guys without using a body double. Davis called Reliant Corp of Houston a pack of "pirates" --and now he'll walk the plank for daring to stand up to the Texas marauders.



Here is the full text of the article in case the link goes bad:

http://www.gregpalast.com/detail.cfm?artid=257&row=0

Power Outage Traced to Dim Bulb in White House
The Tale of The Brits Who Swiped 800 Jobs From New York,
Carted Off $90 Million, Then Tonight, Turned Off Our Lights
Greg Palast
ZNet

Friday 15 August 2003

I can tell you all about the ne're-do-wells that put out our lights tonight. I came up against these characters -- the Niagara Mohawk Power Company -- some years back. You see, before I was a journalist, I worked for a living, as an investigator of corporate racketeers. In the 1980s, "NiMo" built a nuclear plant, Nine Mile Point, a brutally costly piece of hot junk for which NiMo and its partner companies charged billions to New York State's electricity ratepayers.

To pull off this grand theft by kilowatt, the NiMo-led consortium fabricated cost and schedule reports, then performed a Harry Potter job on the account books. In 1988, I showed a jury a memo from an executive from one partner, Long Island Lighting, giving a lesson to a NiMo honcho on how to lie to government regulators. The jury ordered LILCO to pay $4.3 billion and, ultimately, put them out of business.

And that's why, if you're in the Northeast, you're reading this by candlelight tonight. Here's what happened. After LILCO was hammered by the law, after government regulators slammed Niagara Mohawk and dozens of other book-cooking, document-doctoring utility companies all over America with fines and penalties totaling in the tens of billions of dollars, the industry leaders got together to swear never to break the regulations again. Their plan was not to follow the rules, but to ELIMINATE the rules. They called it "deregulation."

It was like a committee of bank robbers figuring out how to make safecracking legal.

But they dare not launch the scheme in the USA. Rather, in 1990, one devious little bunch of operators out of Texas, Houston Natural Gas, operating under the alias "Enron," talked an over-the-edge free-market fanatic, Britain's Prime Minister Margaret Thatcher, into licensing the first completely deregulated power plant in the hemisphere.

And so began an economic disease called "regulatory reform" that spread faster than SARS. Notably, Enron rewarded Thatcher's Energy Minister, one Lord Wakeham, with a bushel of dollar bills for 'consulting' services and a seat on Enron's board of directors. The English experiment proved the viability of Enron's new industrial formula: that the enthusiasm of politicians for deregulation was in direct proportion to the payola provided by power companies.

The power elite first moved on England because they knew Americans wouldn't swallow the deregulation snake oil easily. The USA had gotten used to cheap power available at the flick of switch. This was the legacy of Franklin Roosevelt who, in 1933, caged the man he thought to be the last of the power pirates, Samuel Insull. Wall Street wheeler-dealer Insull created the Power Trust, and six decades before Ken Lay, faked account books and ripped off consumers. To frustrate Insull and his ilk, FDR gave us the Federal Power Commission and the Public Utilities Holding Company Act which told electricity companies where to stand and salute. Detailed regulations limited charges to real expenditures plus a government-set profit. The laws banned power "trading" and required companies to keep the lights on under threat of arrest -- no blackout blackmail to hike rates.

Of particular significance as I write here in the dark, regulators told utilities exactly how much they had to spend to insure the system stayed in repair and the lights stayed on. Bureaucrats crawled along the wire and, like me, crawled through the account books, to make sure the power execs spent customers' money on parts and labor. If they didn't, we'd whack'm over the head with our thick rule books. Did we get in the way of these businessmen's entrepreneurial spirit? Damn right we did.

Most important, FDR banned political contributions from utility companies -- no 'soft' money, no 'hard' money, no money PERIOD.

But then came George the First. In 1992, just prior to his departure from the White House, President Bush Senior gave the power industry one long deep-through-the-teeth kiss good-bye: federal deregulation of electricity. It was a legacy he wanted to leave for his son, the gratitude of power companies which ponied up $16 million for the Republican campaign of 2000, seven times the sum they gave Democrats.

But Poppy Bush's gift of deregulating of wholesale prices set by the feds only got the power pirates halfway to the plunder of Joe Ratepayer. For the big payday they needed deregulation at the state level. There were only two states, California and Texas, big enough and Republican enough to put the electricity market con into operation.

California fell first. The power companies spent $39 million to defeat a 1998 referendum pushed by Ralph Nadar which would have blocked the de-reg scam. Another $37 million was spent on lobbying and lubricating the campaign coffers of the state's politicians to write a lie into law: in the deregulation act's preamble, the Legislature promised that deregulation would reduce electricity bills by 20%. In fact, when in the first California city to go "lawless," San Diego, the 20% savings became a 300% jump in surcharges.

Enron circled California and licked its lips. As the number one contributor to the George W. Bush campaigns, it was confident about the future. With just a half dozen other companies it controlled at times 100% of the available power capacity needed to keep the Golden State lit. Their motto, "your money or your lights."

Enron and its comrades played the system like a broken ATM machine, yanking out the bills. For example, in the shamelessly fixed "auctions" for electricity held by the state, Enron bid, in one instance, to supply 500 megawatts of electricity over a 15 megawatt line. That's like pouring a gallon of gasoline into a thimble -- the lines would burn up if they attempted it. Faced with blackout because of Enron's destructive bid, the state was willing to pay anything to keep the lights on.

And the state did. According to Dr. Anjali Sheffrin, economist with the California state Independent System Operator which directs power deliveries, between May and November 2000, three power giants physically or "economically" withheld power from the state and concocted enough false bids to cost the California customers over $6.2 billion in excess charges.

It took until December 20, 2000, with the lights going out on the Golden Gate, for President Bill Clinton, once a deregulation booster, to find his lost Democratic soul and impose price caps in California and ban Enron from the market.

But the light-bulb buccaneers didn't have to wait long to put their hooks back into the treasure chest. Within seventy-two hours of moving into the White House, while he was still sweeping out the inaugural champagne bottles, George Bush the Second reversed Clinton's executive order and put the power pirates back in business in California. Enron, Reliant (aka Houston Industries), TXU (aka Texas Utilities) and the others who had economically snipped California's wires knew they could count on Dubya, who as governor of the Lone Star state cut them the richest deregulation deal in America.

Meanwhile, the deregulation bug made it to New York where Republican Governor George Pataki and his industry-picked utility commissioners ripped the lid off electric bills and relieved my old friends at Niagara Mohawk of the expensive obligation to properly fund the maintenance of the grid system.

And the Pataki-Bush Axis of Weasels permitted something that must have former New York governor Roosevelt spinning in his wheelchair in Heaven: They allowed a foreign company, the notoriously incompetent National Grid of England, to buy up NiMo, get rid of 800 workers and pocket most of their wages - producing a bonus for NiMo stockholders approaching $90 million.

Is tonight's black-out a surprise? Heck, no, not to us in the field who've watched Bush's buddies flick the switches across the globe. In Brazil, Houston Industries seized ownership of Rio de Janeiro's electric company. The Texans (aided by their French partners) fired workers, raised prices, cut maintenance expenditures and, CLICK! the juice went out so often the locals now call it, "Rio Dark."

So too the free-market British buckaroos controlling Niagara Mohawk raised prices, slashed staff, cut maintenance and CLICK! -- New York joins Brazil in the Dark Ages.

Californians have found the solution to the deregulation disaster: re-call the only governor in the nation with the cojones to stand up to the electricity price fixers. And unlike Arnold Schwarzenegger, Gov. Gray Davis stood alone against the bad guys without using a body double. Davis called Reliant Corp of Houston a pack of "pirates" --and now he'll walk the plank for daring to stand up to the Texas marauders.

So where's the President? Just before he landed on the deck of the Abe Lincoln, the White House was so concerned about our brave troops facing the foe that they used the cover of war for a new push in Congress for yet more electricity deregulation. This has a certain logic: there's no sense defeating Iraq if a hostile regime remains in California.

Sitting in the dark, as my laptop battery runs low, I don't know if the truth about deregulation will ever see the light --until we change the dim bulb in the White House.

See Greg Palast's award-winning reports for BBC Television and the Guardian papers of Britain at www.GregPalast.com. Contact Palast at his New York office: media@gregpalast.com.

Greg Palast is the author of the New York Times bestseller, "The Best Democracy Money Can Buy" (Penguin USA) and the worstseller, "Democracy and Regulation," a guide to electricity deregulation published by the United Nations (written with T. MacGregor and J. Oppenheim).

Posted by Lisa at 09:24 PM
June 12, 2003
Californians Beware: Don't Buy In To The Latest Energy "Crisis" Scam

I'm hearing murmurings on my local TV news (KTVU) a week or two ago about how California might be headed for some kind of new energy crisis because of repairs being made on power plants.

You have got to be kidding me. Every year there's a new and improved reason for a "crisis" to justify charging Californians even more for their power than the previous year.

Not only is there a "crisis" all of a sudden around summertime every year for a different reason, but every year we find out the year before's reason was merely a new creative inaccuracy (as revealed later in some report before being swept under the carpet, again).

Here's a CNN article from November 2002 that I just found in a pile of stuff I never got around to blogging before now that sums up how things were just starting to look back then.

Looks like they're starting to pick up the offenders. How nice. Nice show for the people. Let's see if it goes anywhere.

Here are some other articles I've posted earlier on this subject that remind us that the important part is to make sure that the State of California doesn't pay these companies a penny more for these blatant overcharges.

Last I checked, the State Of California still owed the power companies a bundle for the overcharges.

More articles and docs on this in the days to come. Maybe this will be the year that Californians 1) don't get shafted by the energy companies again and 2) see some of these crooks actually go to jail and 3) (new addition 6/13/03) "Get their money back" from the crooks who conspired to steal it from them by not having to pay one penny of the 7 Billion dollar tab.

I'm not holding my breath, but it sure will be interesting to see how this thing plays out.

Report: Evidence of price-gouging during California energy crisis


SACRAMENTO, California (AP) -- A report by federal energy regulators details how two power companies may have conspired to drive up prices during California's 2000-2001 energy crisis.

The previously undisclosed findings have angered officials who say regulators let the companies off with just a slap on the wrist.

The Federal Energy Regulatory Commission report focuses on discussions between employees of Williams and AES Corporation about prolonging an outage at a power plant to take advantage of higher prices the state was paying at the height of the crisis.

The report says employees also cut deals to shut down a second power plant AES operated for Williams.

As a result of the two plants being closed for 15 days, Williams earned more than $10 million in energy sales from its other plants.

The FERC investigation ended in March 2001 when Williams agreed to refund the state $8 million. The companies did not admit any wrongdoing.

Here is the entire text of the article in case the link goes bad:

http://www.cnn.com/2002/US/West/11/16/california.energy.ap/index.html

Report: Evidence of price-gouging during California energy crisis

Sunday, November 17, 2002 Posted: 1:25 AM EST (0625 GMT)
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SACRAMENTO, California (AP) -- A report by federal energy regulators details how two power companies may have conspired to drive up prices during California's 2000-2001 energy crisis.

The previously undisclosed findings have angered officials who say regulators let the companies off with just a slap on the wrist.

The Federal Energy Regulatory Commission report focuses on discussions between employees of Williams and AES Corporation about prolonging an outage at a power plant to take advantage of higher prices the state was paying at the height of the crisis.

The report says employees also cut deals to shut down a second power plant AES operated for Williams.

As a result of the two plants being closed for 15 days, Williams earned more than $10 million in energy sales from its other plants.

The FERC investigation ended in March 2001 when Williams agreed to refund the state $8 million. The companies did not admit any wrongdoing.

Posted by Lisa at 12:23 PM
March 30, 2003
More On How Californians Were Defrauded By Over 30 Different Companies

When this thing is over, the state better owe ZERO dollars and charges better be filed against the companies involved.

We can not allow this kind of behavior to just become business as usual. We need to set an example for the rest of the country. If Energy companies want to play these kinds of games, fine. Arguably, we can't stop them.

We can, however, try to make sure that they will have to pay the consequences when they get caught. At the very least we shouldn't have to pay for energy that we didn't really need to buy in the first place.
Energy Market Manipulated, Regulators Say
By Jonathan Peterson and Ricardo Alonso-Zaldivar for the LA Times.


Taking a tough new stance, federal energy regulators said Wednesday that more than 30 private firms manipulated natural gas and electricity prices during the California energy crisis... the Federal Energy Regulatory Commission threatened to revoke the trading authority of eight subsidiaries of troubled Enron Corp. for allegedly gaming the natural gas market. The commission also said it's prepared to strip the trading authority of Reliant Energy Services Inc., now known as Reliant Resources Inc., and BP Energy Co. for allegedly engaging in "coordinated efforts" to manipulate electricity prices at Palo Verde, a key Arizona trading hub. Both companies denied the charges...

The commission also stopped short of approving the state's request to renegotiate $20 billion in long-term energy contracts that were signed during the period of feverish prices in 2001.

"Show me the money," Gov. Gray Davis declared. "Where's the $9 billion that we've been asking for, for two years? That is when I'll finally feel vindicated, when we get the money back that these energy companies stole from this state."

Davis said the state is prepared to keep pressing its case in court if California's refund isn't boosted when the matter goes back to a federal administrative law judge, the next step in the process.

Here is the full text of the article in case the link goes bad:

http://www.latimes.com/la-fi-ferc27mar27,1,3575138.story?coll=la%2Dhome%2Dleftrail

Los Angeles Times - latimes.com Get The Times delivered to your door everyday. Just as you get latimes.com delivered to your PC throughout the day. A subcription is a great compliment to latimes.com. Stay connected!

KTLA
La Opinion

March 27, 2003
E-mail story Print

Energy Market Manipulated, Regulators Say
* FERC moves to increase California's refund to $3.3 billion, still far less than the state seeks.

By Jonathan Peterson and Ricardo Alonso-Zaldivar, Times Staff Writers

WASHINGTON -- Taking a tough new stance, federal energy regulators said Wednesday that more than 30 private firms manipulated natural gas and electricity prices during the California energy crisis, and moved to increase the state's refund to about $3.3 billion.

In addition, the Federal Energy Regulatory Commission threatened to revoke the trading authority of eight subsidiaries of troubled Enron Corp. for allegedly gaming the natural gas market. The commission also said it's prepared to strip the trading authority of Reliant Energy Services Inc., now known as Reliant Resources Inc., and BP Energy Co. for allegedly engaging in "coordinated efforts" to manipulate electricity prices at Palo Verde, a key Arizona trading hub. Both companies denied the charges.

California officials expressed some satisfaction with the FERC decision, but emphasized that the remedy fell far short of the $8.9 billion in refunds sought by a coalition of state agencies and its major utilities, including Pacific Gas & Electric and Southern California Edison.

The commission also stopped short of approving the state's request to renegotiate $20 billion in long-term energy contracts that were signed during the period of feverish prices in 2001.

"Show me the money," Gov. Gray Davis declared. "Where's the $9 billion that we've been asking for, for two years? That is when I'll finally feel vindicated, when we get the money back that these energy companies stole from this state."

Davis said the state is prepared to keep pressing its case in court if California's refund isn't boosted when the matter goes back to a federal administrative law judge, the next step in the process.

FERC officials, long criticized for an easygoing approach toward the corporations they regulate, insisted that their 13-month investigation into the causes of California's energy crisis proves the agency is taking its oversight role seriously.

"This is all part of our role as the cop on the beat," said FERC Chairman Pat Wood III. "We have said from the beginning that a belief in the free enterprise system goes hand in hand with a responsibility to see that the playing field is level and that everyone plays fair. If there was ever any doubt that this was part of our core philosophy, that doubt should now be dispelled."

As part of its action Wednesday, FERC asked more than 30 companies and utilities to justify actions that may have violated anti-gaming provisions. These companies and utilities included some of the out-of-state actors that were branded during the energy crisis as preying on California, including Reliant, a Williams Cos.-AES Corp. venture and Mirant Corp.

But FERC also singled out a number of in-state companies and utilities for possible wrongdoing. Among them: Southern California Edison; the Los Angeles Department of Water and Power; and Sempra Energy, the parent of San Diego Gas & Electric and Southern California Gas Co.

In fact, Southern California Edison is one of the major players in the state's quest for refunds, thrusting it in the awkward position of being both accuser and accused.

"We will certainly file a response," to the market manipulation allegation, said John Bryson, chief executive of the utility's parent, Rosemead-based Edison International. He added that the FERC allegation related to no more than about $7,000 of power charges.

"The most important thing today," Bryson said, "is that the staff report shows pervasive unlawful and unethical manipulation of the power market, causing California consumers billions of dollars of direct damages."

Edison officials believe their utility would qualify for up to 25% of the refund money, which they expect would ultimately be returned to customers through lower rates in the future.

Other companies and utilities reached for comment Wednesday roundly denied FERC's allegations. Brad Church, a spokesman for Tulsa, Okla.-based Williams said "a fact-based analysis" of its alleged role in gaming the state's electricity market would find no wrongdoing.

Steven Prince, chief executive of Sempra's wholesale-trading unit, said he is "confident the FERC will conclude that our activities in the California energy market were proper."

Los Angeles Mayor Jim Hahn on Wednesday ridiculed the FERC decision to include the city's DWP among the possible price gougers.

"In its shotgun approach, FERC is seeking to hold all energy producers liable when all evidence points to the fact that the LADWP was a major part of the solution," Hahn said.

Energy companies named prominently in the report -- many already battered on the stock market -- saw further declines Wednesday. Reliant shares fell 95 cents, or nearly 24%, to close at $3.05 on the New York Stock Exchange.

The flurry of developments came as FERC released its definitive findings on the turbulent episode of rolling blackouts and soaring prices that rattled the California economy in 2000 and 2001.

Some applauded the agency's announcements Wednesday. "FERC took an important step today in recognizing that the Western energy market was manipulated during the energy crisis," said Rep. Doug Ose (R-Sacramento), who chairs a House subcommittee on natural resources.

Still, despite a FERC staff conclusion that prices for long-term power were influenced by market manipulation, two of three board members said they would be reluctant to approve Gov. Davis' demand to renegotiate the long-term power contracts.

The contracts were based, in part, on short-term prices that FERC now concedes were the result of broken markets and abusive practices by sellers. In a report to the commissioners, Donald Gelinas, a senior FERC staffer, found that "market dysfunction" in California affected the long-term contracts.

But Commissioner Nora Mead Brownell said FERC should be extremely reluctant to void contracts that were willingly entered into by competent parties. "Investors will not participate in a market in which disgruntled buyers are allowed to break contracts," she said.

FERC commissioners did accept a staff recommendation that could lead to more money for California through another avenue. The staff called for scrutinizing the actions of dozens of companies to see if the firms had violated fair-market principles they had agreed to abide by as a condition of doing business in California's deregulated market.

If abusive behavior is shown to have taken place, FERC can order the firms to return ill-gotten profits for the period of Jan. 1, 2000, to June 21, 2001. Otherwise, the companies are now only liable for refunds for the period of Oct. 2, 2000, to June 21, 2001 -- a timetable set by a quirk in federal law.

In any case, a gulf would still remain between the $9 billion demanded by California officials and the amount being considered by FERC.

On Wednesday, FERC said it would change the method of calculating natural gas overcharges that led to higher electricity prices. Staffers said that would add an estimated $1.5 billion to the $1.8 billion previously set by an administrative law judge, for a new total of about $3.3 billion. But because of debts that the utilities owe their power suppliers, even the higher figure of $3.3 billion would leave a net refund of only $300 million.

"If we don't get $9 billion out of refunds, we will go to federal court," said Richard Katz, a senior advisor to Davis, deriding FERC decisions Wednesday as "better wrapping on the same old package."

During the crisis and its aftermath, FERC officials often focused on the imperfections in California's energy deregulation plan and other problems, while state officials focused on alleged wrongdoing by energy firms. That tension continued on Wednesday, even as federal regulators moved further than ever toward blaming companies for misconduct.

An "underlying supply-demand imbalance and flawed market design combined to make a fertile environment for market manipulation," FERC said in a statement.

For example, FERC said Wednesday that phone conversations and transcripts suggest Reliant and BP Energy Co. worked together to manipulate energy prices at Palo Verde, which sets prices for electricity trading throughout the Southwest.

Both Houston-based firms denied the charges and said they would cooperate with the continuing investigation. In response to accusations that Reliant and BP Energy worked together to boost energy prices, Reliant spokesman Richard Wheatley said a "small number" of suspect transactions with BP were made three years ago. The company discovered the transactions through its internal review and bought them to the attention of FERC, Wheatley said.

"The transactions were not authorized by Reliant, and they violated the company's own trading practices and procedures," Wheatley said. "However, there is no evidence that the trades impacted the market."

FERC also said that two Enron subsidiaries, Enron Power Marketing Inc. and Enron Energy Services Inc., could lose their authority to set market-based rates. In addition, FERC said it would explore whether Enron and a handful of firms and municipalities with which it traded -- including the cities of Glendale, Redding and the Modesto Irrigation District of Northern California -- engaged in gaming of energy markets and might be ordered to give up profits or face other sanctions.

A spokeswoman for Enron Corp., whose subsidiaries were accused of manipulating natural gas and electricity prices in California, said the company was reviewing the FERC orders.

According to FERC, the Los Angeles Department of Water and Power may have engaged in a market gaming strategy known as "ricochet" or "megawatt laundering," which involved buying energy from the now-defunct California Power Exchange, shipping it to another entity and then selling it back into California as imported power not subject to the state's price caps.

To carry out the strategy "Enron needed others to move power into and out of the [California] system," the report said. The DWP was among those that allegedly collaborated, according to the report. The FERC staff called the ricochet strategy an "exercise of market power" and a violation of California market rules.

It recommended that the DWP and eight other companies or partnerships be required to return any ill-gotten profits. In one week during December 2000, the nine may have made as much as $10 million from megawatt laundering. The DWP was fourth from the top in a list ranking the Enron trading partners in order of potential profits.

A DWP spokesman said it filed evidence last week with FERC disproving the allegations. The FERC report "indicates to me they didn't read our response," spokesman Randy Howard said.

Times staff writers Nancy Vogel, Nancy Rivera Brooks, James F. Peltz, Jerry Hirsch, Hanah Cho, Debora Vrana, Scott Reckard and Doug Smith contributed to this report.

Posted by Lisa at 12:05 PM
March 03, 2003
Reliant Resources, Williams Cos., Mirant Corp. and ???

So these as-yet-unnamed energy companies conspired to create the appearance of network congestion so that the state would have to purchase energy from "alternative" suppliers at exorbitant prices.

One more time: Allegedly, (no one's been convicted in a court of law, yet), most or all of the power companies involved in the California power grid misrepresented to the people, businesses and goverment of California that higher-priced energy was needed, due to demand, when it, in fact, was not.
(They lied to make a bunch of money.)

Energy report claims vast cheating of state
Evidence to feds cites $7.5 billion in overcharges
By Mark Martin and Christian Berthelsen for SF Gate.


Among the discoveries:

-- Internal memos from several companies show power traders developed complicated trading strategies that resemble some of the schemes Enron used in California. In separate proceedings, two Enron traders have pleaded guilty in federal court to wire fraud over the company's colorfully named market games like "Death Star" and "Get Shorty." Several strategies involved zapping megawatts around the West Coast to create transmission congestion -- or the appearance of congestion -- and volatility in the marketplace, driving up prices.

Some companies partnered with municipal utilities within California on the gaming strategies, the report shows.

-- Electricity generators purposely shut down power plants in California to take advantage of shortages and earn more money selling alternative megawatts. Two companies -- Reliant Resources and Williams Cos. -- have been forced to turn over money after tape recordings revealed power plant operators and traders discussing turning off plants to boost profits, and a source said the state had uncovered other examples similar to cases brought against Reliant and Williams.

-- Energy market manipulation between May 2000 and June 2001 allowed power companies to earn more than $7.5 billion in profits they wouldn't have seen under fair market conditions.


And what kind of garbage is this below? Why should these people be able to remain nameless and faceless after they ripped us off? So they can go and do it all again?:

The report, due to FERC on Monday, will not be made public unless the commission decides to reverse a protective order. Sources familiar with the report refused to name which companies are accused of wrongdoing.

Here is the full text of the article in case the link goes bad:

http://sfgate.com/cgi-bin/article.cgi?file=/c/a/2003/03/01/MN215702.DTL


Energy report claims vast cheating of state
Evidence to feds cites $7.5 billion in overcharges

Mark Martin, Christian Berthelsen, Chronicle Staff Writers Saturday, March 1, 2003

A report to be delivered to federal energy regulators Monday will provide new and extensive evidence backing up claims that a wide range of power companies manipulated California's energy markets and reaped at least $7. 5 billion in unfair profits, sources told The Chronicle.

Compiled by a team of California lawyers who have had unprecedented access to internal company records for the last three months, the report will show that power traders used Enron-style manipulation strategies to gouge the state during the energy crisis. Costs to the state's consumers also soared because power plants were deliberately idled to drive up prices, according to the report, which will be filed with the Federal Energy Regulatory Commission.

Sources said the evidence backs up many claims California officials have made since the beginning of the energy crisis, which caused blackouts throughout the state in 2000 and 2001 and led to record-high rate increases that Californians are still paying.

It may provide a strong rebuttal to a FERC judge's ruling in December that the state actually owed money to generators over unpaid bills stemming from the crisis.

The federal commission will consider the judge's ruling, the state's report and rebuttals from power companies when it makes a final ruling on California's claim that it is owed billions in refunds. That decision could come as early as this month.

BENDING, BREAKING RULES

New evidence will show that companies took advantage of tight energy supplies and a disastrously designed market to bend and break rules to bolster profits, a source who is familiar with the state's report said.

"The market misconduct was widespread. It involved most participants in the California energy market," the source said.

The new evidence has been amassed during a special discovery period granted by FERC that has allowed lawyers from three state agencies and two utilities to depose power company officials, listen to tape-recorded conversations among energy traders and pore over thousands of pages of company documents. The team,

among other things, has questioned employees of big power companies like Reliant Resources and Mirant Corp., subpoenaed information from a Montana utility and interviewed officials with the Los Angeles Department of Water and Power.

All of that will be submitted Monday in what may be California's last chance to convince FERC that a primary cause of the state's power woes was unscrupulous corporate behavior.

Among the discoveries:

-- Internal memos from several companies show power traders developed complicated trading strategies that resemble some of the schemes Enron used in California. In separate proceedings, two Enron traders have pleaded guilty in federal court to wire fraud over the company's colorfully named market games like "Death Star" and "Get Shorty." Several strategies involved zapping megawatts around the West Coast to create transmission congestion -- or the appearance of congestion -- and volatility in the marketplace, driving up prices.

Some companies partnered with municipal utilities within California on the gaming strategies, the report shows.

-- Electricity generators purposely shut down power plants in California to take advantage of shortages and earn more money selling alternative megawatts. Two companies -- Reliant Resources and Williams Cos. -- have been forced to turn over money after tape recordings revealed power plant operators and traders discussing turning off plants to boost profits, and a source said the state had uncovered other examples similar to cases brought against Reliant and Williams.

-- Energy market manipulation between May 2000 and June 2001 allowed power companies to earn more than $7.5 billion in profits they wouldn't have seen under fair market conditions.

-- For at least part of the crisis, market manipulation led to energy prices that were double what they should have been, according to one source. From May to October 2000, the average price California paid for power was $100 per megawatt hour, when fair market conditions should have had power going for $50.

COMPANIES UNIDENTIFIED

The report, due to FERC on Monday, will not be made public unless the commission decides to reverse a protective order. Sources familiar with the report refused to name which companies are accused of wrongdoing.

Some of the biggest energy providers in California continued to insist Friday that they had behaved properly during the crisis.

"We look forward to seeing what they file," said Duke Energy's Pat Mullen. "We have and always will operate within the market rules."

Most companies, including Duke, have told FERC they did not utilize the same schemes Enron employed in California. And several past attempts by the state to show a widespread effort to shut down power plants for profit have not provided definitive proof.

How FERC will handle the new report remains to be seen.

Generators will have until March 20 to submit rebuttals to the state's case.

The commission's first meeting after that date is March 26, and a FERC spokesman said there could be some decision on the refund issue then or at meetings in April.

In a preliminary decision in December, a FERC judge concluded that California had been overcharged by $1.8 billion between October 2000 and June 2001. But the judge also ruled the state owed energy companies $3 billion.

The ruling was a stunning blow to Gov. Gray Davis, who has said the state is owed about $8.9 billion for unjust prices between January 2000 and June 2001.

The judge's decision did not take into account market manipulation, however,

and dealt with a narrower time frame.

E-mail the writers at markmartin@sfchronicle.com and cberthelsen@sfchronicle.com.

Posted by Lisa at 01:06 PM