Wirt, I love you man, and you're a brave SOB...I hope ENRON doesn't take you
from us.

> -----Original Message-----
> From: Wirt Atmar [SMTP:[log in to unmask]]
> Sent: Thursday, July 26, 2001 11:50 AM
> To:   [log in to unmask]
> Subject:      OT: California mess (was: Vast RW Conspiracy (was:
> encryption/compression))
>
> My comment last week:
>
> >I suspect that the entire energy mess in California has been one giant
> >conspiracy by Texas Republicans to make Gray Davis, the Democratic
> governor
> >of California, look bad.
>
> ...got me a lot of private email during the last weekend. I only had time
> to
> respond to one correspondent and time to now to respond to the list. I
> wrote
> this in part last Saturday:
>
> =======================================
>
> Dynegy, Reliant, El Paso, and Enron all have their headquarters just steps
> away from  Haliburton's headquarters in Houston. [Vice President Dick
> Cheney
> was the former chairman of Haliburton.] Of all of these, it's Enron that's
> most in control.
>
> Enron doesn't produce anything. It's a gaming house, which they politely
> refer to as a brokerage firm, filled with computers and Ph.D.'s in
> mathematics and economics. And it's Enron that's profited most from and
> done
> the most to create California's mess.
>
> While it would be completely unfair to say that Enron created the
> deregulatory environment that they're now profiting from, it is wholly
> justified to say that early on saw the opportunity that was presenting
> itself
> to massively profit from it. While the people at Enron describe themselves
> as
> steely-eyed capitalists, most people who understand the situation would
> tend
> to call them "major league a**holes," to use Cheney's elegant phrase.
>
> The Bush Republican Party of Texas is centered in downtown Houston, in a
> few
> block area called "Energy Gulch". Not only have these energy companies
> funnelled obscenely massive amounts of money into the Republican Party,
> they've also managed to lubricate legistators in the various state and
> national governments to alter trade and commerce rules in their favor.
> There
> is no clearer definition of "soft money" corruption that this.
>
> While the various states, especially in the West, have eagerly entered
> into
> deregulation measures over the past decade, based heavily on the promises
> made by these energy companies, they didn't fully understand what they
> were
> being offered. The Republican government of California during Pete
> Wilson's
> tenure was the original instigator of energy deregulation in California.
> The
> state officials who made these deals and passed their laws were in essence
> trusting amateurs who either naively believed in a free-market economy or
> the
> promises of extremely cheap energy now find themselves up against sharks.
>
> Nonetheless, it's a game that's time is nearly over. After California's
> experience, almost every western state that was on the road to
> deregulation,
> including New Mexico, with either Republican or Democratic legislatures,
> has
> begun furiously backpedaling, saying the hell with the Bush wing of the
> Republican's party advice.
>
> Nonetheless, in terms of apologetics, you can still get the smokescreens
> of
> "it's all the conspiracy & paranoia kooks" from the arch-conservative end
> of
> the Republicans. In that regard, my favorite senator is Larry Craig of
> Idaho.
> He had this to say:
>
>    http://www.senate.gov/~craig/con_feat.htm#editorial
>
> as did the president of Dynegy, Chuck Watson:
>
>    http://www.dynegy.com/dcfiles.nsf/Files/cw040501.pdf/$File/cw040501.pdf
>
> The "shortage of supply" that Watson mentions was a manufactured event,
> not a
> natural phenomenon. As an integral part of the California deregulation,
> the
> cooperating power companies (and the two largest in California, PG&E and
> SCE,
> participated) were forced to sell off their generating facilities. These
> plants were bought by the Texas companies and Duke Energy of North
> Carolina,
> which are now massively profiting from what appears to be an enforced
> shortage.
>
> The most likely outcome of all of this is that California will likely
> "nationalize" a significant proportion of its state-internal power
> production
> facilities and build the necessary remainder under its own auspices, run
> as
> government facilities in the manner that Los Angeles runs its power
> production facilities, basically removing all effective out-of-state
> control.
>
> ========================================
>
> While many of you will immediately want to write in response, after I
> wrote
> the above text, which was based wholly on my understanding of what is
> going
> on, I searched around on the web to find any sort of documentation to
> confirm
> my understanding. Although I found a great deal of material, these two
> recent
> articles by the (generally quite conservative) Washington Post and by the
> Sacramento Bee are worth reading with great care:
>
>      http://detnews.com/2001/business/0103/10/business-197824.htm
>
>      http://www.sacbee.com/news/special/power/050601california.html
>
> I would tend to believe that the Sacramento Bee series of articles on the
> subject are very likely to be nominated for a Pulitzer Prize.
>
> In the Washington Post article, Kenneth Lay, the chairman of Enron,
> decries
> the balkanization of the western power grid. As he says: "Right now they
> want
> to kind of build a wall around their state," telling the utility companies
> that California's power may not be exported, Lay said. But California
> depends
> on power transmitted from outside its borders. How can it insist on a
> one-way
> trade? Lay said.
>
>    "Lay acknowledged that the idea could spread. "Different states are
> trying
> to put barriers on any power in their states leaving their state," he
> said.
> "You can't have interstate commerce that way."
>
> In one sense you can say that Enron is merely capitalizing off the
> circumstances that have presented themselves, and perhaps surprisingly,
> the
> single most important enabling technology for Enron was the rise of the
> internet. Enron is the world's largest B-2-B business. What they do (both
> legitimately and in terms of market manipulation) simply couldn't be done
> if
> it had to be done by telephones and people calling one another. The spot
> market just couldn't be made to move quickly enough.
>
> However, the balkanization of the western grid is a way of breaking
> Enron's
> grip on the market and the reason why Lay is upset. Enron's one-year rise
> of
> 80 billion dollars in gross revenue may not last much longer. If you own
> stock in Enron, it might well be a good time to sell. The western state
> governments simply aren't going to allow what happened to California to
> happen to them as well.
>
> Wirt Atmar
>
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