From GGALLON@bak.rr.com Sun Sep 29 12:54:42 2002
Date: Thu, 18 Jul 2002 00:36:56 -0700
From: Gary Gallon
To:
Subject: Enron Energy Scandal: Gallon Environment Letter
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THE GALLON ENVIRONMENT LETTER
506 Victoria Ave., Montreal,
Quebec H3Y 2R5
Ph. (514) 369-0230, Fax
(514) 369-3282
Email
cibe@web.net
Vol. 6, No. 15,
July 17, 2002
This is the first of a two-part special
series on corruption.
***********************************************************************
CORPORATE MISMANAGEMENT HARMS THE ECONOMY AND THE ENVIRONMENT
What harmed the U.S. economy more? The environmentalists calling for coal
plants to clean up? The socialists? The anti- globalization movement? Or
maybe the 9/11 disaster? No. The greatest harm that has been done to the
United States economy has been by the friends of free enterprise -
corrupt corporations and their bosses. They have lied to the American
people, presented doctored financial statements to the Security and
Exchange Commission (SEC). They syphoned hundreds of billions of dollars
into their personal bank accounts. They seriously harmed the financial
status of teachers, unions, and employee pension funds that invested in
them based on false information. They broken investor confidence in the
stock exchange. They had the complicit help of the federal government
which failed to act, or worse, said everything was okay because "it's
time to stop over-regulating industry." Corrupt businessmen have done
more to harm the American and the world economy than the environmental
movement, the anti-globalization movement and Kyoto combined.
Historians will look back on this period as one of the great economic
flim-flams of all times. It right up there with the "South Seas Bubble."
A classic massive economic flim-flam that rocked the European world in
1720. It is taught today to new stockbrokers and floor traders, as a
warning on what can happen when government oversight fails. See the full
South Seas Bubble story in the next newsletter. What this financial
crisis has done is to shake investors' confidence and harmed the ability
of governments to conduct "good governance for a civil society". The
crisis causes the national focus to shift from environmental protection,
social programs, and education, to the loss of the national wealth that
allows us to pursue long-term civil society goals.
The U.S. is currently suffering from graft and corruption on a scale that
is normally seen in Nigeria, Kenya and other developing countries. We
have learned from these countries that the syphoning of national wealth
to Swiss, Cayman Island, and other secret bank accounts can bring a
country to its knees. And we know that such corruption and loss of good
governance can harm the ability of a country to pay for and deliver its
social and environmental programs. In these two special issues we are
going to examine the negative impacts on the economy of the problems
created by:
o Enron
o Arthur Andersen
o Worldcom
o Adelphia Communications
o Global Crossing
o Tyco International
The Detroit Free Press wrote that, "the one thing that makes stock
markets work is trust. Trust that the powers in place -- government
regulators, independent accountants, corporate management, boards of
directors, -- can somehow ferret out companies that are bad apples. In
this case, the system fell apart, big time, with Enron Corp. And now
we're worried that we could be looking at a whole orchard gone bad.
Enron's collapse has raised troubling questions about our sense of
economic security," Federal Reserve Chairman Alan Greenspan acknowledged
that corporate scandals had indirectly hurt business spending and called
for tougher penalties for CEOs who break the law. Source,
http://money.cnn.com/2002/07/16/news/economy/greenspan/index.htm .
Source, "Sins of Enron will be hard to overcome," by Susan Tompor,
Detroit Free Press, Detroit, Michigan, April 23, 2002. See the full
article at http://www.freep.com/money/business/tompor23_20020423.htm .
**********************************************************************
WHITE COLLAR CRIMINALS: THE ENEMY WITHIN
While the United States is focussing almost all of its war efforts
outside the United States, it has failed in its war to curb corporate
criminals from nearly ruining the U.S. economy. Like a "Donut Effect",
the core of the U.S. economy is being rotted out from the inside while it
strengthens its exterior defences. Much of the abuse has been driven by
improper economic drivers. Those drivers include:
o the strong push for annual profit increases,
o stock option incentives to corporate executives who can push up
the price of
their companies' stocks
o politicians looking for quick financial fixes (contributions) from
the very corporations
they are supposed to regulate.
o exorbitant remunerations in the tens and hundreds of millions of
dollars to
corporate executives who don't warrant it and who don't need it
These improper economic drivers distort the market and divert human
effort and ingenuity away from true production and serious economic
growth in a country. The narrow parameters, enforced by greedy and
unbiased third-party accounting firms, also thwart the achievement of
long-term goals such as better corporate productivity, energy efficiency,
worker and society benefits, and environmental protection.
We have seen massive fraud ruin nations' economies. President Daniel Arap
Moi's Kenya has been plundered by the President and his family, with all
the money going to Swiss Bank Accounts. Zimbabwe has been brought to its
economic knees by President Robert Mugabe and his corrupt partners.
Nigeria is seen as one of the world's worst corrupt basket cases. The
United States thought it was above all of that. Apparently, it is not.
The U.S. is about to fall into that same economic and social morass, if
the federal government does not change its "go soft on white collar crime
ways." Too many good people and too many good companies are being
seriously injured by fraudulent corporate practices of a few very large
companies. It can be easily stopped, but hasn't. You can see "The Gallon
Environment Letter's" first special issue on Enron by requesting Vol. 6,
No. 2, February 8, 2002 be sent to you. See the website that has been
chronicling Enron's deceptions and the federal government's support at
http://www.thedailyenron.com/ . See the Citizen Works website at
http://www.citizenworks.org/enron/corp-scandal.php .
***********************************************************************
ENRON ENERGY COMPANY MISMANAGEMENT AND COLLAPSE HARMED AMERICAN ECONOMY
Enron, headquartered in Houston, Texas, was one of the U.S.'s largest and
most influential energy trading companies. It was the seventh largest
company in the nation. It accounted for 13 percent of electric power
trading and 16 percent of gas trading in North America. It bought up a
number of energy producers and began to control the electricity and
natural gas trading markets in the Western United States. The energy
trader allegedly used thousands of off-the-book partnerships to hide
nearly $1 billion in debt and inflate profits. George Bush's close Texas
buddy and large campaign contribute, Kenneth Lay ran the company and
oversaw its massive expansion beyond the state borders. Bush
affectionately refers to Kenneth Lay as "Kenny Boy". Managed properly,
Enron would have become a strong contributor to the basic productivity of
the U.S. economy. Instead, under poor leadership, run by not just greedy,
but super-greedy executives, led by Kenneth Lay and Jeffrey Skilling,
Enron became a crooked, nasty corporation that grubbed for government
financing, improperly reported earnings, grotesquely over-paid
executives, and hid billions of dollars. After mismanaging the company
and stripping it of its wealth, the corporate executives, on December 2,
2001, filed the largest bankruptcy then in U.S. history. For more
information on Jeffrey Skilling see the BBC website at
http://news.bbc.co.uk/hi/english/static/in_depth/business/2002/enron/4.stm
One of Enron's chief operators was its CFO, Andrew Fastow. Known as the
financial wizard behind Enron, Fastow was at the helm when Enron
announced $680 million in losses, while he, himself, pocketed $30 million
in Enron stock sales. His former boss, Jeffrey Skilling, who quit as
Enron CEO August 2001, wanted to develop Enron as an asset-light company
that could rapidly exploit deregulating markets for energy, water,
broadband capacity and anything else that could be traded. So beginning
in 1993, Fastow created hundreds of "special-purpose entities" (SPE's)
designed to transfer Enron's debt to an outside company and get the money
off Enron's books -- without giving up control of the assets that stood
behind the debt. Fastow worked with the international accounting firm
Arthur Andersen to hide the money and mis-report earnings. Arthur
Andersen before then was respected worldwide for its impartial and
third-party reporting on the accounts of major corporations.
Enron, the world's largest energy trader with 20,000 employees, tumbled
into the biggest corporate bankruptcy in U.S. history. Enron now owes
more than $100 billion to investors, suppliers and creditors. Enron's
stock listed as ENRNQ is currently trading at 10 cents down from a high
of $90.56. U.S. Sen. Carl Levin, D-Mich., who leads the Senate permanent
subcommittee on investigations. said, "that's because what happened at
Enron wasn't just a failure of regulations and laws," Levin said. "It was
a failure of corporate culture, a failure of values, a failure of heart."
You can see a stock chart of Enron's share collapse at the website
http://money.cnn.com/news/specials/enron/ . Source, "Sins of Enron will
be hard to overcome," by Susan Tompor, Detroit Free Press, Detroit,
Michigan, April 23, 2002. See the full article at
http://www.freep.com/money/business/tompor23_20020423.htm
.
Newsweek reported that, "before Enron collapsed insiders, like Kenneth
Lay, dumped over 16 million shares of Enron stock pocketing over $1
billion in profits. When Enron failed its 15,000 employees learned they
had lost $1 billion in pension funds." The company's bankruptcy
protection Chapter 11 filing leaves banks, pension plans and other
lenders with at least $5 billion at risk. More than 4,000 Enron employees
lost their jobs and 401(k) pension savings. The collapse is still
reverberating in the stock market, which dropped some $200 billion in
value since Enron's December 2nd bankruptcy filing. What's amazing is
that the US government, under George Bush did not respond to the warnings
a year in advance and haven't indicted any Enron officials for this
massive fraud perpetrated on the US public. See more about Andrew Fastow
at the Time Magazine website
http://www.time.com/time/business/article/0,8599,201871,00.html . Also
see Western Washington University's library site on the Enron Scandal at
http://www.library.wwu.edu/cbl/Hazel/topic/enron.shtml
***********************************************************************
TEXAS SENATOR PHIL GRAMM AND HIS WIFE WENDY GRAMM HELPED BUSH HELP ENRON
By the early 1990s Enron wanted to branch off into trading energy futures
and derivatives. This wish was granted by Wendy Gramm, who George H. Bush
had appointed to head the Washington, D.C. - based Federal Energy
Regulatory Commission (FERC). Her husband, Texas Senator Phil Gramm
furthered Enron's wishes by removing virtually all regulatory oversight
over Enron's trading. He's the top Republican on the Senate Banking
Committee and a big recipient of Enron campaign contributions. She's on
Enron's board and audit committee. Together, they are Phil and Wendy
Gramm, a Washington power couple entangled like no other in Enron's fall.
Wendy Gramm is named in a suit filed by investors against Enron
executives and directors. And Phil Gramm's role in reducing government
oversight of energy trading, which helped Enron in its rise to power, is
under the microscope as well. Sen. Gramm collected almost $100,000 in
campaign contributions from Enron over the past 12 years, the
second-biggest draw in Congress. And Wendy Gramm collected between
$915,000 and $1.85 million from Enron in salary, attendance fees, stock
options and dividends between 1993 and 2001, according to Public Citizen,
a Washington watchdog group. Wendy Gramm took a seat on Enron's board in
1993, just five weeks after resigning as chairwoman of the Commodity
Futures Trading Commission, where she pushed through a key regulatory
exemption that benefited Enron. Had these people not had such an obvious
conflict of interest and financial benefit from Enron, they might have
been better able to promote energy conservation and new energy sources
that were not in Enron's interest. Clearly, their conflicts should be
investigated. Source, "Enron and Phil and Wendy Gramm," by Nancy Benac,
Associated Press, Washington, D.C., January 24, 2002. See the full story
at the website http://www.nctimes.net/news/2002/20020124/52934.html .
In February, 2002 the Senate killed an attempt by California Democrat
Sen. Dianne Feinstein to regulate over-the-counter energy derivatives.
The "Daily Enron Report", stated that, "Senator Phil Gramm (R-Tx) led the
fight to kill the Feinstein measure. It was Gramm who sponsored
legislation that deregulated over-the-counter energy derivatives in the
first place. Enron and Gramm's wife, Wendy, who served as an Enron
director, supported that legislation. Wendy Gramm had also served as head
of the Federal Energy Regulatory Commission under President George H.
Bush and pushed through the first regulatory weakening of energy
trading." The Report added that, "Gramm, who has been a tireless
supporter of deregulation, has announced he will retire at the end of his
current term." We trust that Gramm is not leaving because his obvious
support for such poor corporate behaviour would be an embarrassment to
the Republican Party. Source,
http://www.thedailyenron.com/documents/20020515075115-55997.asp
***********************************************************************
ENRON'S THOMAS WHITE APPOINTED BY BUSH AS SECRETARY OF ARMY
Kenneth Lay requested, and George Bush agreed, that Enron executive,
Thomas White should be appointed Secretary of the Army. Thomas White was
a Vice President of Enron, having worked there for 11 years. White cashed
out of Enron selling more than $31 million in stock just before the
company collapsed. Enron needed White placed as Secretary of the Army,
since the Army is a major producer and consumer of energy and could lock
in a number of lucrative contracts with Enron and its subsidiaries. MSNBC
reported that, "federal investigators are combing through the wreckage of
Enron, including trading strategies used by White's Enron unit to hike
electricity prices in California in 2000 and 2001. The White House has
continued to back White, but Republicans, Newsweek has learned, are
quietly passing the word that they'd prefer Thomas White to resign."
Thomas E. White became the 18th Secretary of the Army on May 31, 2001,
after nomination to that post by President Bush and confirmation by the
United States Senate. White is responsible for the department's annual
budget of nearly $82 billion. Mr. White attended the Naval Postgraduate
School, Monterey, California, and graduated in 1974 with a degree in
Operations Research. In 1984, he attended The United States Army War
College, Carlisle, Pennsylvania. Secretary White retired from the Army in
July 1990. From 1990 to 2001, White worked for Enron. With a less biassed
Secretary of the Army in place, the Army could have maintained and
enhanced its energy production with renewable energy sources such as
wind, solar and geothermal. It could have launched a major energy
conservation program to reduce consumption - but not with a former Enron
employee who had a clear conflict of interest.
White started pushing for accelerated privatization of the provision of
Army military base energy services, something that would directly
substantially benefit Enron, and something Kenneth Lay/Enron had been
pushing very hard. Public Citizen, a Ralph Nader watchdog group, is
charging that White is in a conflict of interest and wants White to
testify before Congress. In addition, Public Citizen would like White to
more fully explain 29 meetings and phone calls with senior Enron
officials that he participated in after he became Army secretary. A
senior House Democrat, Henry A. Waxman (Calif.), also wants White to
testify, about Enron and related issues. Senator Carl M. Levin (D-Mich)
has raised questions about White's financial ties to Enron in a letter to
the Office of Government Ethics, copied to White, according to a Levin
spokesman. Levin's office would neither release the letter or White's
reply, nor comment on the reply. See a bio on Thomas White at
http://www.army.mil/leaders/Secarmy/Secarmy.htmSource,
http://www.msnbc.com/news/779608.asp?cp1=1#BODY . See the website
http://www.politicalamazon.com/enron-white.html#quiz . See California
Senator, Diane Feinstein's website on enron at
http://search.atomz.com/search/?sp-q=enron&sp-a=0003166e-sp00000000 .
***********************************************************************
HOW ENRON NEARLY BROUGHT DOWN CALIFORNIA
California is a robust economy. It is rated as one of the top ten
national economies in the world. It took all of California's economic
wealth and ingenuity to withstand a nasty corporate cash raid by Enron
and other energy companies who tried to corner the California energy
market. It started when Kenneth Lay threatened California Governor Gray
Davis with energy supply shortages, if California didn't stop opposing
pulling the caps off of natural gas and electricity prices. California
told Kenneth Lay and Enron to take a hike. That is when the energy
shortages and price gouging started in California. Enron used tactics
like "Fat Boy", "Death Star" and "Get Shorty" to whipsaw the Western
States energy market. According to internal company documents released
this week, Enron profited in California through "dummied-up" power
delivery schedules and by using other techniques that congested
transmission lines. The internal memos between Enron lawyers also
describe how Enron provided "false information" to the state and
"knowingly increased the congestion costs." Enron also faces
investigation on allegations of generating extra revenue through
techniques that congested transmission lines in Texas. Maybe the most
startling discovery was how Enron used federally imposed power price
caps--designed to offer Californians relief--to actually raise power
costs further. The documents show that Enron would purchase electric
power at the $250 per megawatt capped rate from California energy
producers and then resell the power outside the state for as much as
$1200 per megawatt. Source,
http://www.thedailyenron.com/documents/20020507102645-88952.asp .
Enron helped exploit the California energy market in late 2001 and
contributed to artificial energy shortages, black outs, and the near
bankruptcy of California's two productive and reputable companies -
Pacific Gas & Electric (PG&E) and California Edison. Enron stripped
billions of dollars from California's government coffers and California
wants it back. Though California may never get it, since much of the
money may have found its way into personal corporate executive secret
bank accounts in Switzerland, the Cayman Islands and the Jersey Islands.
A top investigator for the Texas Public Utility Commission said such
allegations against Enron and five other companies operating in Texas
"absolutely" parallel those described in the California memo. "It's
creating congestion, and then solving it to make money," said Parviz
Adib, director of the PUC's market oversight division. Janee
Briesemeister, a senior policy analyst for the Austin office of Consumers
Union, also drew parallels. "It looks like Enron was engaged in the same
type of behaviour in the Texas market, the same ... gaming of
transmission congestion and the same refusal to turn over information,"
she said. An Enron official declined comment, except to say that the
company did not engage in improper activities in Texas or California.
Visit the Texas Public Utility Commission website at
http://www.puc.sate.tx.us . Source, "Enron price tampering in Texas,
California alleged," by R.A. Dyer, Fort Worth Star-Telegram, Austin,
Texas, May 8, 2002. , (512) 476-4294, email rdyer@star-telegram.com .
Source, http://www.dfw.com/mld/startelegram/news/state/3219612.htm .
Visit the Enron corporate website at http://www.enron.com/corp/ .
***********************************************************************
MSNBC REPORTS ON THE ENRON RUN ON CALIFORNIA ENERGY
With the right to trade these energy derivatives, MSNBC reported that
"Enron decided it was easier to cheat than play by the rules. Rather than
letting the free market decide energy future prices Enron set up nearly
3,000 offshore companies, many of which they treated as partnerships.
These offshore companies provided Enron with the perfect ruse to
manipulate energy prices and, at the same time, hide its own debts."
MSNBC further reported that, "when states like California came to Enron
to lock in energy contracts Enron would show them contracts it had signed
with its "partnerships" offshore locking in contracts at increasingly
astronomical prices. Faced with what appeared to be legitimate contracts
with others, Enron's customers had no choice but to submit to Enron's
extortive energy prices. Now that it could circumvent the magic of the
marketplace and set its own price for energy, Enron executives saw no end
to the possibilities for its offshore entities. By transferring its
obligations to some of the these shell companies they were able to show
Wall Street profits when in fact the company was being looted into
insolvency by its top managers."
MSNBC went to state that, "when their Texas friend, George W. Bush, won
the White House Enron's CEO, Kenneth Lay, saw the possibility of
extending Enron's giant Ponzi scheme well into the future. Lay was
appointed to the Bush transition team where he worked directly with Vice
President Cheney to develop the administration's national energy
policies. No fewer than 52 former Enron executive, lobbyists, lawyers or
significant shareholders ended up working for the Bush administration. It
was only when an uncontrollable meltdown of Enron's scheme began in
December 2001 that the world learned that Enron's apparent success had
been little more than a complex illusion." Within days of Enron's
bankruptcy California's energy prices returned to normal levels
-convincing proof that Enron had successfully distorted national energy
market prices. It is now being learned that other energy companies, such
as El Paso Natural Gas, may have participated in the scheme by actually
withholding energy from the market. Source,
http://www.msnbc.com/news/779608.asp?cp1=1#BODY . Also see the website a
historical chronicle of Enron's collapse at
http://www.chron.com/content/chronicle/special/01/enron/index.html . As
well check out the Daily Enron at http://www.thedailyenron.com/ .
***********************************************************************
"DEATH STAR", "FAT BOY", AND "RICOCHET": SOME OF ENRON TACTICS USED TO
FLEECE CALIFORNIA ENERGY
Enron energy traders were indeed manipulating the newly deregulated
California energy market to drive up prices at the cost of billions of
dollars to both the state and citizens of California. The traders used
fraudulent manoeuver to which they gave juvenile but revealing nicknames:
"Death Star," "Fat Boy," "Ricochet," and "Get Shorty." (The point of such
pseudo-combat names for intra-company operations, of course, is to
impress bosses and colleagues with one's mercantile ruthlessness.) Under
"Death Star," Enron would over-schedule its expected power transmissions
to create the illusion that the state's grid would be overloaded, then
receive state payment for "relieving" the congestion. The beauty of this
con, the company's memos noted, is that "Enron gets paid for moving
energy to relieve congestion without actually moving any energy or
relieving any congestion." Under "Fat Boy"Enron over-scheduled power
transmission. For example, to a company subsidiary that didn't really
need all of it. Then Enron would sell the "excess" power to the state at
a premium. "Ricochet", also called "megawatt laundering", was the power
equivalent of a real-estate land flip. Buy in-state power cheaply, flip
it out-of-state to an intermediary, then re-sell it to California at a
highly inflated "imported" price. Source, "Death Star and Fat Boy," by
Michael King, The Austin Texas Chronicle, May 17, 2002. May 17, 2002. See
the full story at
http://www.austinchronicle.com/issues/dispatch/2002-05-17/pols_capitol.html
. See more background on Enron at the CNN website
http://www.cnn.com/SPECIALS/2002/enron/ .
************************************************************************
FERC FAILED TO REGULATE THE OUT-OF-CONTROL ENERGY MARKET CREATED BY ENRON
AND OTHERS
The Federal Energy Regulatory Commission (FERC) was created by the
federal government to regulate the energy market and to control
out-of-control energy companies like Enron. (See the following story
describing FERC). But FERC failed miserably in carrying out its
responsibilities regarding Enron and the California energy crisis. The
Government of California and its State Senator, Diane Feinstein, called
again and again on FERC to carry out its regulatory responsibilities in
2001 when California was being taken to the cleaners by Enron and other
energy companies. FERC ignored their requests for action and appeared to
be protecting the companies rather than the state government and the
people. FERC did not act like FERC - a federal energy regulator. On the
contrary, with orders from President George Bush's office to deregulate
and get government off the back of industry, FERC had no inclination to
regulate at the time. Maybe it was because FERC's Chairman, Patrick Wood,
III, from Texas, was appointed by Bush under the strong recommendation of
Enron's Kenneth Lay. In a bizarre move, FERC launched a quiet
investigation of Enron just before the California energy crisis back in
May 2001. After looking the deals over, FERC decided in August 2001 to
drop the investigation. It is reported that FERC did not end the probe of
Enron because it discovered that all was well at Enron. On the contrary,
the probe was closed after FERC investigators reported that the company's
trading, "exposed the corporation to very large financial risks" and "the
company's dependence on its corporate credit worthiness to maintain its
trading capability and to fulfill its trading commitments," placed itself
and its trading partners at significant risk. That is crazy logic in the
name of protecting the public. But it makes absolute sense if you want to
protect the perpetrators. Source,
http://www.thedailyenron.com/documents/20020515075115-55997.asp .
**********************************************************************
SENATOR JOSEPH LIEBERMAN CALLS FOR PROBE OF FERC
The Bush administration expressed shock about the California crisis,
however, federal documents show that the administration through FERC had
known for at least six months that Enron was flirting with disaster. Now,
Senator Joe Lieberman, D-Conn, Chairman of the Governmental Affairs
Committee, said that FERC "failed to take the logical next steps."
Lieberman wrote in a letter to FERC Chairman Pat Wood, stating that, "our
inquiry to date raises serious questions about whether FERC appropriately
discharged its duties to monitor and regulate energy markets, followed
through on warranted reviews of Enron's energy trading business, and
heeded important warning signs of problems in Enron's business
activities." FERC concluded that Enron, which accounted for 13 percent of
electric power trading and 16 percent of gas trading in North America,
did not have sufficient market share to disrupt the energy market if it
collapsed. But even more importantly, the agency concluded that the
chances of Enron failing were "remote." A document released last week
also caused some to charge that Enron committed fraud in its dealings in
the state of California. FERC itself has been investigating whether Enron
either took advantage of or helped spark the crisis in California's newly
deregulated power markets. Lieberman's Governmental Affairs Committee is
now investigating FERC for its handling of Enron. Source, "FERC botched
Enron probe: U.S. senator says investigation of trading unit concluded
that risk of Enron failure was 'remote."
Curtis Hebert, a former Mississippi utility regulator who was regarded as
a protégé of Senate Majority Leader Trent Lott (R-Miss.), was named
chairman of the Federal Energy Regulatory Commission (FERC) by President
George W. Bush in January 2001. A Republican, Hebert's tenure as head of
FERC has been criticized for being too laissez faire, and Hebert's
critics accuse him of being a free market ideologue. What is interesting
is that Hebert's appointment as Chairman of FERC was to have lasted until
2004. But he was removed as chair within 8 months of being appointed in
January 2001, following the Enron and California fiasco, and replaced in
August 2001 by the new chairman, Patrick Wood, III.
The U.S. General Accounting Office released a study faulting a Federal
Energy Regulatory Commission (FERC) inquiry from February that found no
evidence of power generators using plant outages to drive up prices in
California. The following is Senator Feinstein's statement on the GAO
study: "This GAO study confirms that for far too long FERC was guilty of
both inaction and incomplete attention to the energy problems in
California. The GAO report, requested by Congressmen Jay Inslee and Peter
DeFazio, effectively overturns the conclusion made by FERC in February
that generating companies were not gaming the system in California. The
GAO has now said, "FERC's study was not thorough enough to support its
overall conclusion that audited companies were not physically withholding
electricity supply to influence prices." The conclusions by the GAO,
however, puts allegations of price gouging front and center, while asking
the federal government, "where was it when all of this was going on?"
Source, TruthOut.Com, Washington, D.C., June 29, 2001,
http://www.truthout.org/docs_01/0398.Feinstein.Gaming.htm .
Why Texas FERC Chairman Pat Wood remains in the Commission after clearly
failing in his duties is beyond logic. And now to ask him to investigate
the Enron issues when he is a part of the problem, is like asking the fox
to protect the hen-house. It won't happen. Source, CNN Money, New York,
May 15, 2002. See the full story at
http://money.cnn.com/2002/05/15/news/ferc_enron/index.htm .
***********************************************************************
WHAT IS FERC?
The Federal Energy Regulatory Commission (FERC) is an independent
regulatory agency within the Department of Energy that Regulates the
transmission and sale of natural gas for resale in interstate commerce;
regulates the transmission of oil by pipeline in interstate commerce;
regulates the transmission and wholesale sales of electricity in
interstate commerce; licenses and inspects private, municipal and state
hydroelectric projects; oversees environmental matters related to natural
gas, oil, electricity and hydroelectric projects; and, administers
accounting and financial reporting regulations and conduct of
jurisdictional companies. FERC was created through the Department of
Energy Organization Act on October 1, 1977. At that time, the
Commission's predecessor, the Federal Power Commission (FPC), was
abolished, and the new agency (FERC) inherited most of the FPC's
responsibilities. The Commission's legal authority comes from the Federal
Power Act of 1935, the Natural Gas Act (NGA) of 1938, the Natural Gas
Policy Act (NGPA) of 1978, the Public Utility Regulatory Policies Act of
1978, and the Energy Policy Act of 1992. Read more about Enabling
Legislation. The Commission is composed of five members who are appointed
by the President of the United States, with the advice and consent of the
Senate. The Commission's current membership consists of Pat Wood III
(Chairman), William L. Massey, Linda Key Breathitt, and Nora Mead
Brownell.
Patrick Henry Wood III is Chairman of the Federal Energy Regulatory
Commission. He was nominated to the Commission by President George W.
Bush and confirmed by the Senate in 2001. His term expires June 30, 2005.
Before joining the Commission, Mr. Wood, a Republican, was Chairman of
the Public Utility Commission of Texas. He has worked as an engineer with
Arco Indonesia and as an attorney with the Baker & Botts law firm in
Washington, DC. Visit the FERC website at http://www.ferc.gov/ .
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FEDERAL RESERVE CHAIRMAN, GREENSPAN, SPEAKS AGAINST CORPORATE
"MALFEASANCE"
U.S. Federal Reserve Chairman, Alan Greenspan, spoke before Congress
concerned about, "the startling stream of accounting scandals that has
rocked Americans' faith in corporate leaders (which could)weaken the
economic recovery of the nation," reports Associated Press. "Those
accounting problems already have contributed to a slide in the stock
market," he said. Greenspan stated that, "manifestations of lax corporate
governance, in my judgement , are largely a symptom of a failed CEO."
Source, "Greenspan: Corporate Scandals Could Weaken Recovery," by
Jeannine Aversa, The Associated Press, Washington, D.C. July 17, 2002.
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(c) 2002
Canadian Institute for
Business and the
Environment, Montreal &
Toronto
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rights reserved
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