Great article by Jason. Jason is a master on insight in Enron since he covered the collapse and corruption of Enron as illustrated from his book, News Junkie. He was the first to interview Jeff Skilling who is now serving time in prison in his role in the Enron scandal. Jason gives more insight to the role of Dick Cheney in the Enron Task Force.
From Truthout:
By Jason Leopold
t r u t h o u t
Investigative Report
Thursday 19 July 2007
In-depth investigation shows how Vice President Dick Cheney pressured federal energy regulators to conceal evidence of widespread market manipulation by energy companies during the California electricity crisis in 2001.
In March 2001, while California's two largest utilities were teetering on the brink of bankruptcy, and the state's electricity crisis was spiraling out of control, Vice President Dick Cheney summoned Curt Hebert, the chairman of the Federal Energy Regulatory Commission (FERC), to his office next to the White House for a hastily arranged meeting.
Cheney had just been informed by his longtime friend Thomas Cruikshank, the man who handpicked the vice president to succeed him at Halliburton in the mid-1990s, that federal energy regulators were close to completing an investigation into allegations that Tulsa, Oklahoma-based Williams Companies and AES Corporation of Arlington, Virginia had created an artificial power shortage in California in April and May of 2000 by shutting down a power plant for more than two weeks.
Cruikshank was a member of Williams's board of directors, and perhaps more importantly, had been one of many energy industry insiders advising Cheney's energy task force on a wide-range of policy issues, including deregulation of the nation's electricity sector, that would benefit Williams financially.
Cruikshank informed the vice president he had learned about the preliminary findings of FERC's investigation during a Williams board meeting earlier in March 2001. FERC, Cruikshank told Cheney, was in possession of incriminating audio tapes in which a Williams official and an AES power plant operator discussed keeping a Southern California power plant offline so Williams could continue to receive the $750 per megawatt hour premium for emergency power California's grid operator was forced to procure to keep the lights on in Southern California.
Cheney Orders FERC to Seal Evidence
But the documentary evidence of widespread market manipulation that FERC obtained in March 2001, while Kelliher was soliciting energy industry officials to assist in writing the National Energy Policy, and when Cruikshank and Allbaugh disclosed to the vice president the manipulative tactics Williams and Reliant had engaged in, was sealed by FERC on direct orders by Cheney because it would have been a political nightmare for the Bush administration and would have derailed a recommendation of one of the cornerstones of the vice president's National Energy Policy: deregulation, and perhaps scuttle the policy altogether if evidence about the energy companies behavior in California was made public, according to half-a-dozen former FERC officials and former Energy Department officials.
So in May 2001, just days before Cheney unveiled his long-awaited National Energy Policy, FERC entered into confidential settlements with Williams in which the company forfeited $8 million it was owed by California's grid operator for power Williams sold into the marketplace at inflated prices. Williams did not admit any guilt for the power plant shutdown and, on orders from Cheney, FERC agreed to keep details of the settlement sealed. FERC later entered into a similar settlement with Reliant. The company agreed to forfeit $13.8 million it was owed by California's grid operator, did not admit to any wrongdoing, and FERC kept the details of the settlement confidential.
Moreover, FERC kept California officials in the dark about the nature of the state's claims that its wholesale electricity market was being manipulated. Hebert is now the vice president of external affairs for Entergy in New Orleans.
For former Governor Gray Davis, the illegal behavior by energy companies like Williams that federal energy regulators discovered, then covered up, during a time when the former governor had said publicly he believed such behavior had taken place, is beyond disturbing.
Executive Privilege
Immediately following reports that Cheney relied upon the recommendations of 400 energy industry executives to draft the National Energy Policy, lawmakers began to demand that the vice president turn over documents regarding his task force meetings to Congress. The vice president vehemently refused.
With White House Counsel Alberto Gonzales weighing in on the issue, the administration exerted "executive privilege" as the reason it refused to turn over task force documents to Democratic lawmakers. The issue reached the Supreme Court that ruled in Cheney's favor. As Attorney General, Gonzales still refuses to publicly release audiotapes from 2000 and 2001 in which other energy companies were also found to have discussed ways in which to manipulate the California energy market. Some of the heads of those companies implicated in the crisis also provided Cheney with input on the National Energy Policy.
In 2004, Reliant became the first energy company that was indicted for its role in manufacturing the California energy crisis. A year later, the company refunded California $453 million.
Last month, two power companies agreed to pay California $84 million to settle charges stemming from the 2000-2001 California energy crisis.
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