LOLOL
DUMP DAVI$
GO SIMON
Posted on 05/16/2002 4:59:50 PM PDT by TenthAmendmentChampion
California in the dark. California paying energy companies a small fortune for its electricity. California, where they didn't get round to building any power plants for a decade. California, where retail electricity prices were capped, lower than wholesale prices.
California, the state that drove one of its own utility companies to bankruptcy. Well, at least California was not to blame. It was all the fault of Enron Corp., the big energy company that grew so crooked that it eventually fell under the weight of its crookedness.
"They [Enron] wanted to bilk us for every dollar they could, and that is exactly what they did," Gov. Gray Davis, D-Calif., said last week. "It is in black and white ... saying: 'Here is what we intend to do. We are going to manipulate the system. We're going to make a killing and drive up our stock prices.'"
King of Demagoguery
Davis, king of smokescreens, camouflage, bluster and demagoguery, is at it again.
Release of internal Enron memoranda has enabled him to find someone else to blame for California's electricity crisis in 2000-01, a crisis that has left his state paying billions of dollars more than it should for electricity, contributing to the state's budget deficit, estimated at more than $20 billion.
Yes, Enron, we now know, was a corrupt mess, a fraudulent company, and Davis knows we know. Enron can easily be blamed. But was it Enron that caused the crisis?
Professor James Sweeney of Stanford University, the author of a book on the electricity crisis, has examined the Enron memos. Sweeney concludes: "No strategy of Enron's that is identified in the memo could cause the California electricity crisis, nor even significantly increase the overall price level. Most exploited clumsy elements of the market rules."
"Clumsy elements of the market rules?" This is the heart of the matter. California "deregulated" electricity in 1996 but put a cap on the price utilities could charge for electricity. Prices of natural gas soared in 2000. The electricity companies were paying more wholesale than the retail price they were charging. That is not a good position for any company.
Disaster of Regulation
The utilities were obliged by the state government's rules to buy on the spot market, the refuge of the desperate, not in secure and cheaper long-term contracts that offer a fairer price. They indebted themselves to the point where no one wanted to lend to them. They came close to bankruptcy – and one of the two main utilities, Pacific Gas & Electric, eventually declared bankruptcy – and because they were in financial disarray, their suppliers and financiers had grounds on which to charge them a risk premium.
It was all a disaster, a disaster of regulation.
Companies selling their products, individuals selling their home or their car, sell in any market at the highest price at which they can sell. And so electricity generating companies did profit from the financial mess of California's utilities. But they did not create the mess.
Enron, being a corrupt company, sought to profit in corrupt ways. It was, in Sweeney's assessment, "a petty thief ... shoddy, possibly illegal." But for Davis's attempt to pin the blame for the whole crisis on Enron, Sweeney finds this analogy: "A destructive earthquake takes place. Someone is found looting a store. The mayor of the city has a press conference showing the felon and asserting that the felon was responsible for the earthquake."
Yet Davis is right. In this remarkable case a body can be held responsible for the earthquake. But it isn't Enron. It is a somebody.
Statist Davis Cost Taxpayers Billions
For California's electricity crisis might have been alleviated at a stroke: a stroke of the governor's pen. By allowing the utilities to raise their prices in line with their higher costs and to buy electricity under much cheaper, long-term contracts, Davis could have calmed the whole crisis and saved his taxpayers billions of dollars. He chose not to.
Instead he resorted to bluster, attacking the private sector in a manner that was remarkable for an American politician.
Davis could have found the state control of industry and prices which he extols in any country in the Soviet bloc before 1990. Strangely, these countries were far less prosperous than California which, stripped off from the rest of the United States, has the world's sixth biggest economy. Is Davis not aware that the prosperity his state and his country enjoy have been created by private enterprise? It appears not.
Capitalism has many flaws, but it has given ordinary people in Western countries a standard of living unprecedented in human history. Ridiculously and offensively, Davis tries to shift blame for the mistakes made in regulating his state's electricity industry on to the private sector.
Enron, one of the worst and most prominent examples of corruption in America's private sector in many years, a fraudulent company that long pulled the wool over the eyes of the public and investors, is his latest cloak.
Pull the Enron cloak aside and there exposed is Davis, one of the worst and most prominent examples of poor public sector leadership in the United States in years. Fraudulent Enron and him do make a fine pair.
Commentary by Ian Campbell, UPI chief economics correspondent.
Copyright 2002 by United Press International.
All rights reserved.
M E M O R A N D U M
TO: Interested parties
FM: Jeff Flint, Senior Strategist, Simon for Governor
DT: May 16, 2002
RE: Gray Davis and Enron
5 QUESTIONS GRAY DAVI$ NEEDS TO ANSWER ABOUT ENRON AND CALIFORNIA’S POWER CRISIS
1.WHY DOES GRAY DAVI$ BELIEVE ENRON DEALT HONESTLY WITH CALIFORNIA? In the now infamous San Diego Union-Tribune Editorial Board on March 8, 2002, Gray DAVI$ – recipient of $120,000 in Enron campaign contributions -- gave Enron a big thumbs up. “Surprisingly, DAVI$ offered a pat on the back to Enron, the bankrupt Houston power trader accused of fraud. ‘Enron was the best of the lot,’ he said. “They dealt with us more honestly.’” (emphasis added). Think we’ll see this quote again (and again) in the campaign?
2.WHEN IS GRAY DAVI$ RETURNING HIS ENRON CAMPAIGN CONTRIBUTIONS? Given that the governor has repeatedly vilified Enron in the press for waging war against California, when can the people of Californian expect that Gray DAVI$ will return the $120,000 in campaign cash he has taken from Enron?
3.WHEN WILL GRAY DAVI$ FIRE HIS OWN HIRED ENERGY PRICE GOUGERS? The governor and his staff have stated that there were good players and bad players in the energy crisis, and produced a list of the “gougers” who may have manipulated California’s markets. What the governor failed to mention was the fact that his handpicked chief energy advisor, S. David Freeman, was one of the biggest gougers in California. During the first 18 months of the 2000-2001 energy crisis, the Freeman-led Los Angeles Department of Water and Power made an extra $200 million. The United States Congress should add Mr. Freeman and Mr. DAVI$’ role with Enron CEO Ken Lay into their investigation. In addition, the criminal investigation called for by Senator Barbara Boxer should also include Freeman, Michael Peevey (who played a central role in the crisis but filed no conflict of interest statement), Vikram Budhraja and Governor DAVI$ himself. What was the role of senior DAVI$ administration officials in this crisis and did any of them profit personally? It certainly appears that Governor himself has profited to the tune of $120,000 in Enron campaign cash.
4.WHEN WILL GRAY DAVI$ DISCLOSE HIS conversations WITH KEN LAY? What did DAVI$ and Enron CEO Kenneth Lay talk about in repeated telephone conversations the two men had during the height of California’s energy crisis, (as disclosed by investigative journalist Lowell Bergman), while the governor was actively soliciting money from Enron to help fund Democratic campaign efforts?
5.WHEN WILL GRAY DAVI$ DISCLOSE ALL HIS STAFF ENERGY CONFLICTS? Does anyone else from the governor’s staff have any potential insider trading issues similar to those surrounding Press Secretary Steve Maviglio, who the Los Angeles Times called upon last year resign or be fired for his actions seeking personal financial gain during the state’s energy crisis?
Mid 2000: Three factors, in order of their impact, combine to leave California short of energy: 1) Failure of the state government to legislate a workable energy plan, 2) Failure of satate government to manage it's growth and 3) Mother nature delivers a short water year in the 2000/2001 winter.
Late 2000: Electrical energy reserves fall below 2% and Davis panics. Davis can't have blackouts on his political record and win reelection. Davis allows his ISO to purchase power at exhorbitant rates to avoid blackouts during the holidays. The plan works, sort of, but Davis still feels the sting.
Early 2001: Davis' political advisors whisper in his ear "you got by this time but this summer will ruin you politically". Now Davis doesn't panic. He makes a cold, calulated political decision. He enters into long term contracts at double the going rate and hides the costs in long term bonds that won't effect the budget for some time.
Mid 2001: Davis starts his "look good" plan. he loosens the state regs (that have been restricting power development for years) and then brags that he got 11 new plants on line. He also starts cranking up the rhetoric against Bush (the FERC).
Mid 2002: Davis latches on to his sole remaining lifeboat, some Enron memos, and screams "THEY'RE THE BAD GUYS" and beside Bush helped them and give us our money back.
All the while Davis has done little about reforming the state's energy policy, nothing about managing it's growth and has no idea how to pay back the bonds let alone get through the next fiscal year.
Regardless how unkind the adjectives describing Davis may seem they are certainly true. I agree with Davis ...he should go to jail.
Well, driving back after lunch, I couldn't help but stop again and inform the small crowd they should walk the three blocks to the Capitol and change "Simon" to "Davis". The kid I spoke to said, "I don't care, I'm just here because I'm outta work."
Well. So the Democrats have paid protesters. Surprise, surprise.
Dan
Dan
Mulholland himself -- excellent!!
Great close. Dump Davis.
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