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POWER OUTAGE TRACED TO DIM BULB IN WHITE HOUSE
http://www.gregpalast.com/detail.cfm?artid=257&row=0

The Tale of The Brits Who Swiped 800 Jobs From
New York, Carted Off $90 Million, Then Tonight,
Turned Off Our Lights [ZNet]
Friday, August 15, 2003
by Greg Palast

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 rewaded Thatcher's
Energy Minister, one Lrd 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
liited charges to real expenditures plus a
governmen-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-teet
kiss good-bye: federal deregulation of electricity.
It was a legacy he wanted t 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 firstCalifornia city to go "lawless,"
San Diego, the 20% savings became a 300% jump in
surcharges. Enrn 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 Indepedent System
Operator which directs power deliveries, between May
and November 2000, three power giants physically or
"ecoomically" 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 overnor
of the Lone Star state cut them the richest deregulation
deal in America. Meanwhile, the deregulation bug made it
to New York here 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
patners) 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
fee-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: thre'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 eer
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).
http://www.gregpalast.com/detail.cfm?artid=257&row=0