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<nettime> palast: 'power outage traced to dim bulb in white house'
nettime's_roving_reporter on Sat, 16 Aug 2003 20:40:50 +0200 (CEST)

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<nettime> palast: 'power outage traced to dim bulb in white house'

     [via <tbyfield {AT} panix.com>, via viridian (at least that's
      what i'm told, but lots of mail didn't get through...)]


   The Tale of The Brits Who Swiped 800 Jobs From New York, 
   Carted Off $90 Million, Then Tonight, Turned Off Our Lights


   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 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

   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

   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

   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 {AT} 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).

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